How is My Credit Score Determined?

A credit score is a complex mathematical model that evaluates many types of information in a credit file to determine your financial reliability or credit risk; that is, how likely you are to repay a loan and make your loan payments on time. Many factors influence your score, with the two most weighted being how you pay your debts and how much debt you owe. For example, late payments on loans, a past bankruptcy, debt collections or a court judgment ordering you to pay money as a result of a lawsuit will negatively affect your credit score.

According to the Fair Isaac Corporation that calculates the popular “FICO score,” the following factors (and weighting) determine your credit score.

  • Payment History (35%), which includes account payment information, bankruptcy or judgments, how long overdue payments are, amount past due, and the time since any adverse occurrences.
  • Amounts Owed (30%), which includes the amounts owed on accounts individually and totaled together as a whole, number of accounts with balances, proportion of credit line used and proportion of installment loan amounts still owed.
  • Length of Credit History (15%), which includes the time since your accounts have been open as well as the time since your accounts have been active.
  • New Credit (10%), which includes the number of and time since recently opened accounts and proportion to total accounts, number of and time since recent credit inquires, and the re-establishment of positive credit history following past payment problems.
  • Types of Credit Used (10%), which includes the number of various types of accounts, like credit cards, retail accounts, installment loans, mortgage, etc.

Credit scores change over time to reflect your current financial behavior and length of credit history. Accurate negative information can be reported for seven years, with the exceptions of bankruptcy (10 years), lawsuits or judgments (seven years or until the statute of limitations runs out, whichever is longer), or information based on an application for a job with a salary of more than $20,000 (no time limitation). Since your credit score is a “snapshot,” it’s unlikely that your credit score a month ago is the same as it is today. 

In order to ensure that credit reports are fair for everyone, certain factors are not included in your score. To name just a few, race, religion, national origin, sex, age, salary, and any other information not proven to be predictive of future credit performance are never included in calculating your score.

What do the score numbers mean?

The Fair Isaac Corporation has developed the FICO scoring system which is used by the three major credit reporting agencies. FICO scores provide a guide to future risk based solely on credit report data. The higher the credit score, the lower the risk for a lender, although no score is able to determine whether a specific customer will be good or bad. Lenders often use additional factors to determine whether to give credit and which interest rates to offer, and each lender has its own strategy to assess risk.

Scores range from 300 to 850, the higher the score, the lower the perceived risk. Because credit scores are just a guide for lenders who use them in a variety of ways and with other information, it is impossible to say what is a “good” versus what is a “bad” score. Credit scores change over time, taking into account both current and past financial performance. To give you an idea of how much payments can change based on your credit score, see the chart of how i nterest rates and monthly payments on a $150,000 30-year, fixed-rate mortgage are affected by the FICO credit score (as of March 2007).

Your FICO Score

Your Interest Rate

Your Monthly Payment

760 – 850



700 – 759



680 – 699



660 – 679



640 – 659



620 – 639



This content has been provided by and is intended to serve as a general guideline.