How Credit Scores Are Calculated (and How to Improve Yours)
A credit score can feel like a black box, but the most widely used scoring model, FICO, is built from five weighted factors. Knowing what each one measures makes it much easier to figure out which habits will actually move your score, instead of guessing.
Payment history — the single biggest factor
Whether you've paid your bills on time is the largest single piece of your score. A single missed payment, especially one that goes 30 or more days late, can knock down a score significantly, and the damage lingers for years. If you take away one thing, it's this: automate payments so a due date is never the reason your score drops.
Amounts owed — how much of your available credit you're using
This is mostly about credit utilization: the share of your available credit card limits that you're currently using. Maxing out cards, even if you pay them off in full every month, can hurt your score if the balance is high when the statement closes. Keeping utilization low, ideally well under a third of your limit, is one of the fastest levers you can pull.
Length of credit history
Older accounts help your score, which is why closing your oldest credit card is often a mistake even if you don't use it much — doing so can shorten your average account age and reduce your total available credit at the same time. This factor moves slowly by nature; there's no shortcut except time.
New credit
Applying for several loans or cards in a short window can ding your score, since it can look like financial stress to a lender. A single, occasional hard inquiry isn't a big deal, but bunching up applications right before you need a good score for something important, like a mortgage, is worth avoiding.
Credit mix
Having a mix of credit types — a credit card and an installment loan, for example, rather than only one type — contributes a smaller piece of the score. It's the least important factor of the five, so it's not worth taking out a loan you don't need purely to diversify your credit mix.
If your score needs work
The factors above double as a repair roadmap: fix any late payments going forward, pay down revolving balances, and leave old accounts open. If your credit report has errors dragging the score down, or the situation is more tangled than you can untangle alone, a credit repair service can help dispute inaccuracies and negotiate with creditors on your behalf.