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How Your Credit Score Is Determined
When most people talk credit scores, they’re talking about your General FICO score—the one lenders are most likely to use. FICO is tight-lipped about the formulas they use to calculate our scores, but we know the general categories they track and how important they are to that calculation. Here are those categories, and what you need to know about them.
Payment history is 35% of your score
Your payment history makes up 35% of your score and it’s pretty much what it sounds like: your history of paying debt in full and on time. The way FICO sees it, this history is a good indicator of how well you handle debt in general. According to CreditCards.com, your payment history is based on seven main factors:
Payment information on various types of accounts, including credit cards, retail accounts, installment loans and mortgages.
The appearance of any adverse public records, such as bankruptcies, judgments, suits and liens, as well as collection items and delinquencies.
How long overdue any delinquent payments have become.
The amount of money still owed on delinquent accounts or collection items.
How much time has passed since any delinquencies, adverse public records or collection items.
The number of past due items listed on a credit report.
How many accounts are being paid as agreed.
FICO determines all of this by analyzing your credit report (which is why your report is far more important than your score). It’s not easy to know when a late payment will pop up and affect your score, as there are no set rules for when creditors have to report late payments. Some might not report your missed payment for 60 days, while others will report it after 30. You can always check your credit report to ensure there are no payments outstanding, but generally, if you have a history of on-time payments, you should be in the clear.
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Credit utilization is 30% of your score
Credit utilization is the amount of credit you have available to you that you’re actually using. This percentage—available credit to used credit—is called your credit utilization ratio. For example, a $1,000 purchase on a credit line of $10,000 gives you a credit utilization ratio of 10%. The lower your utilization, the better your score (except for 0% because it doesn’t give lenders a credit history to scrutinize) and experts say you should not have a ratio higher than 30%.
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Because your credit limit is part of the credit utilization equation, closing an old credit card can sometimes work against your FICO score. That said, people still choose to close old cards and get dinged on their score rather than pay an annual fee for a card they don’t even use. However, it’s best to avoid cancelling credit cards just before applying for a mortgage or any other line of credit.
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Some credit experts suggest opening a bunch of cards to boost your score. Even though it sounds counterintuitive and risky (the temptation to spend!), raising your overall credit limit indeed boosts your FICO score because of credit utilization. Just remember that good financial habits are more important than a credit score.
Some people will tell you it’s important to revolve a balance to build credit, but experts agree: that’s a myth. Credit card analyst Jeanine Skowronski said it best at Forbes:
“You absolutely, positively don’t have to carry a balance,” says Skrowronski, who recommends paying your credit card on time and in full each month. The only thing you’re doing by carrying a balance is paying interest — and with the average national interest rate at 15% that can add up quickly.
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Length of credit history is 15% of your score
The length of your credit history doesn’t make up a huge portion of your score, but it’s still important. According to CreditCards.com, this is the “length of time each account has been open and the length of time since the account’s most recent action.” Here are three main factors that affect your length of history:
- How long your accounts have been open overall.
- How long certain types of accounts have been open.
- How long it’s been since you’ve actually used those accounts.
This factor makes it impossible to have a perfect credit score if you’re new to credit, as you need credit on your report for at least six months to begin generating a history. FICO wants to see a long history of credit usage so they can gauge your long-term financial habits.
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New credit and credit mix are 10% each
New credit and credit mix are two different factors. With new credit, FICO is looking at a few different things:
- How many new accounts you’ve opened in the past 6-12 months: “If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your FICO Scores if you don’t have a lot of other credit information. Even if you have used credit for a long time, opening a new account can still lower your FICO Scores,” says FICO.
- Recent inquiries: An inquiry is when a lender pulls your report to check it. It doesn’t have a huge impact on your score though, and the activity will usually drop off of your report after two years. Plus, FICO only looks at inquiries from the past year.
- How long it’s been since you opened a new account: According to FICO, your score “may consider the time that has passed since you opened a new credit account, for specific types of accounts.”
- How well you’ve bounced back from past payment problems: “Late payment behavior in the past can be overcome; re-establishing credit and making payments on time will raise a FICO score over time.”
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Credit mix is kind of vague, but essentially it means that a history of different kinds of debt is good for your score. FICO says that borrowers with a good mix of credit—cards, car loans, mortgages, student loans—are usually less of a risk to lenders. FICO says:
“The credit mix usually won’t be a key factor in determining your FICO Scores—but it will be more important if your credit report does not have a lot of other information on which to base a score.”
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While there are other credit scores out there, most lenders rely on FICO, and even if they don’t, the scoring models will use similar factors. Keeping tabs on your FICO score should give you a good gauge on your credit worthiness in general.
This story was first published in 2017 and was updated on October 22, 2020 with more current information.
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Tech
Keep That Hotdish Hot With 65% Off a Luncia Casserole Carrier, Only $11 With Promo Code


Luncia Double-Decker Dish Carrier | $11 | Amazon | Promo code SDDU9S7F
It has been a long time since the days we could safely have a potluck or other gatherings, but we have a fantastic deal perfect for once those times return. These double-decker Luncia dish carriers can be had for 65% off when you add promo code SDDU9S7F at checkout and clip the coupon on the site (it’s just below the price). These holders fit 9″x 13″ sized baking dishes.
That means you can insulate and keep two dishes of food warm for only $11 instead of $30. What’s more, your Luncia carrier will arrive by Christmas if you order today as a Prime member.
Just add promo code SDDU9S7F and clip the 5% off coupon to bring the price down to $11 for the blue or the grey option.
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Grab this offer while it’s still around!
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Tech
Conquer Your Pup’s Dander and Fur With $700 Off a Cobalt or Charcoal Bobsweep PetHair Plus Robot Vacuum


Bobsweep PetHair Plus Robot Vacuum & Mop (Cobalt) | $200 | Best Buy
Bobsweep PetHair Plus Robot Vacuum & Mop (Charcoal) | $200 | Best Buy
Allergies can be bad enough as the seasons change. Don’t let pet hair and dander add to that by vacuuming it up early and often. That chore is easier said than done— unless you have a robot vacuum to do the work for you. This lovely bright cobalt Bobsweep PetHair Plus robot vacuum and mop, only $200 today at Best Buy seems like an ideal option. That’s a whopping $700 off, by the way.
You can get the same deal for the charcoal version of the robot vac, too. This model is not only specially made for picking up pet hair, it self docks and charges when it’s finished with the work.
It also comes with a mop attachment, so it can take care of those kitchen floors for you as well. Grab it while it’s still available for this fantastic price!
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Tech
Apple will replace AirPods Pro for free with faulty noise cancellation, static or crackling


Today, exactly one year after Apple first launched the AirPods Pro — and thus the same day the very first AirPods Pro owners will see their one-year warranties expire — Apple has launched a repair program that offers free repairs or replacements for another whole year if your AirPods Pro experience issues with noise cancellation or static.
Specifically, Apple will fix:
Crackling or static sounds that increase in loud environments, with exercise or while talking on the phone
Active Noise Cancellation not working as expected, such as a loss of bass sound, or an increase in background sounds, such as street or airplane noise
Apple says only a “small percentage of AirPods Pro” are affected by the issues, but it apparently wasn’t just an early batch — Apple says affected units were manufactured “before October 2020,” meaning every AirPods Pro ever made might be eligible. That’s quite a recall if so. Apple says it will repair faulty AirPods Pro for two years after you first buy them.
We’ve heard complaints about degraded noise cancellation before, and at least one Verge editor has replaced their AirPods Pro under warranty. It’s nice to hear that Apple isn’t just cutting buyers off as soon as that warranty expires.
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