Credit scores are calculated using your payment history (whether you pay your bills on time, essentially), how much debt you’re carrying, the length of your credit history, and more.

The more you know about how your credit score is calculated, the easier it becomes to build positive credit history and potentially help stay on top of your score. A higher credit score means that your credit card applications may be more likely to be approved and with more favorable interest rates. In some states, credit history can influence how prospective employers evaluate job applications, how insurance companies assess risk and how landlords approve rental applications.

Consider these factors that typically contribute to how credit scores are calculated:

    1. Payment History
    2. Credit Utilization (Amounts Owed)
    3. Length of Credit History
    4. New Credit
    5. Total Accounts (Credit Mix)
chart showing what makes up your credit score

1.  Payment History

This is typically one of the most significant components making up your credit score, because it shows lenders your track record for making payments on time and whether you’ve missed any payments. Paying your installment loans and credit cards on time is one of the ways you can maintain or improve your score. To help you along, take advantage of the automatic bill pay feature lenders offer, which could help you avoid late payments.

2.  Credit Utilization (Amounts Owed)

This is the ratio of your total available credit to the amount of credit used. Lenders will assume you are a higher credit risk if your revolving debt is high. A good rule of thumb is to keep your credit card balances below 30 percent of your total available credit.

3.  Length of Credit History

This considers your oldest account, but also the average age of all of your accounts. For this reason, you should avoid opening too many new accounts at once, especially if you have a short credit history.

4.  New Credit

This is measured not only by the number of new credit accounts you have opened, but also the number of credit report inquiries that are generated when you request a line of credit. The good news is that unsolicited “pre-approved” offers are considered “soft inquiries” and do not negatively impact your credit score. However, if you apply, the lender will make a hard inquiry. Knowing this can help you decide whether you should consider an attractive low-interest offer on a new credit card.

5.  Total Accounts (Credit Mix)

This considers the number of accounts you have and the types of accounts they are. Your score typically benefits from demonstrating a history of managing different kinds of credit, such as a mortgage, installment loans and revolving lines of credit.

Now that you understand the score, the first step to stay on top of it is to get your credit score from a website like  When viewing your scores, be sure to focus on what bureau is providing the data because there can be slight variations in the data contained in each credit report, as different credit scores are calculated in different ways. Additionally, small differences in scores, pulled at different times, are considered normal.

Published February 17, 2015

Updated February 16, 2021

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