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What makes up your credit score, what counts as a good score, how each factor affects it, and 8 proven strategies to improve your credit score in 2026.
Everything you need to know
A credit score is a 3-digit number (typically 300–850) that summarizes your creditworthiness — how likely you are to repay debt. Lenders use it to decide whether to approve loans and at what interest rate.
A 50-point credit score difference can mean the difference between:
Your credit score is one of the most financially important numbers in your life.
| Score Range | Category | What It Means |
|---|---|---|
| 800–850 | Exceptional | Best rates, instant approvals, VIP status |
| 740–799 | Very Good | Near-best rates, strong approvals |
| 670–739 | Good | Most loans approved, reasonable rates |
| 580–669 | Fair | Approval possible, but higher rates |
| 300–579 | Poor | High rejection risk, predatory rates |
The goal: Get to 740+ for access to the best mortgage rates. 760+ unlocks the absolute best tier at most lenders.
FICO scores are calculated from 5 factors:
| Factor | Weight | What It Measures |
|---|---|---|
| Payment History | 35% | On-time vs. late payments |
| Amounts Owed | 30% | Credit utilization ratio |
| Length of Credit History | 15% | Age of accounts |
| New Credit | 10% | Recent applications and new accounts |
| Credit Mix | 10% | Variety of credit types |
The most important factor. A single 30-day late payment can drop your score 60-100 points. Bankruptcies stay for 7-10 years.
What helps: Every on-time payment. Set up autopay for at least the minimum on all accounts. What hurts: Late payments, collections, charge-offs, bankruptcies.
Your utilization ratio = (Total credit card balances) ÷ (Total credit card limits).
| Utilization | Impact on Score |
|---|---|
| 0–9% | Excellent |
| 10–29% | Good |
| 30–49% | Fair — try to reduce |
| 50%+ | Significant negative impact |
Key insight: You can dramatically improve your score in 30-60 days simply by paying down credit card balances.
Older accounts help your score. This is why you should generally not close old credit cards — even ones you don't use. The average age of your accounts matters.
Hard inquiries (from credit applications) stay on your report for 2 years and temporarily drop your score 5-10 points. Multiple mortgage/auto loan inquiries within 14-45 days count as one inquiry.
Having both revolving credit (cards) and installment loans (mortgage, auto) positively impacts your credit mix.