We answer this common question with an explanation of credit score calculation.

Loan officers and bankers are often asked: why did my credit score go down when I paid off debt? The simple answer is: it didn’t necessarily go down only because you paid off a debt, as there are a number of other factors involved in the calculation of your credit score. Several components are included in the calculation of FICO® Credit Scores, and understanding these categories as well as how financial decisions affect your score can help you understand why your score may have changed.

Credit Score Categories

First, it’s important to understand what categories go into a credit score. The FICO® Score models used at each of the three credit bureaus calculate the FICO® Credit Scores using five categories and the following approximate percentages: payment history (35 percent), amounts you owe (30 percent), length of credit history (15 percent), new credit (10 percent) and types of credit (10 percent).1 These percentages are based on the general population and may slightly vary based on your credit profile.

Payment History

Your payment record typically has the largest impact in FICO® Credit Scores at 35 percent. Late or missed payments may have a major impact. If you’re researching a score change, be sure to research your payment records and see if one of your payments was past due or you forgot to pay a bill during a particularly busy month. Even one late payment months ago could have impacted your score, and delinquent payments remain on your credit report for seven years. A long history of demonstrating consistent payments on credit accounts is a good way to show lenders you can responsibly manage additional credit.

Amounts  you Owe

With amounts you owe making up approximately 30 percent of FICO® Credit Scores, the amounts you owe on all your credit accounts may have a significant effect on your score. Your credit utilization rate is the percentage of amounts owed on all of your credit lines compared to the total available credit that you have on your credit accounts. If you are spending $900 a month on a card with a $1,000 limit, even if you’re paying it off in full each month, your FICO® Credit Score will still reflect a utilization rate of 90 percent.

Research shows that people using a high percentage of their available credit limits are more likely to have trouble making some payments now or in the near future, compared to people using a lower level of available credit.  Having credit accounts with an outstanding balance does not necessarily mean you are a high-risk borrower.

Length of Credit History

Length of credit history typically accounts for 15 percent of FICO® Credit Scores. In general, consumers with a longer credit history will have a higher FICO® Score than consumers with a shorter credit history, all else being equal.  For example, a recent college graduate with a very short credit history may have a hard time earning the same high credit score as a retiree with a responsibly used credit card opened in the 1960s. Even people who have not been using for credit long can get a good FICO® Credit Score, depending on what their credit report says about their payment history and amounts owed.

New Credit

New credit typically accounts for 10 percent of your FICO® Credit Score, including requests for new credit. Research shows that opening several credit accounts in a short period of time represents greater risk – especially for people who do not have a long credit history. When a financial institution checks your credit report(s) as a result of your application for new credit, a “hard inquiry” is made to your report, which is then taken into account by FICO® Credit Scores. FICO® Credit Scores do not count any inquiries you initiate from checking your own credit report, any inquiries from employers or insurance companies, or any inquiries lenders make without your knowledge.  These are known as “soft inquiries.” And checking your own credit reports and scores will never affect your FICO® Credit Score.

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Types of Credit

FICO® Credit Scores consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans, which make up 10 percent of your FICO® Credit Score. While you don’t necessarily need one of every type of credit, a variety of credit accounts can demonstrate responsible credit use. However, opening credit lines you don’t plan to use in an effort to get a better score can have the opposite effect — see “New Credit” section above.


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Discover Financial Services and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Discover Financial Services and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating.