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Money · Credit, reports and scores

How credit scores work

Your credit score (usually 300 to 850) predicts whether you'll repay on time, and landlords, insurers and lenders use it. FICO weighs payment history about 35%, amounts owed 30%, length of history 15%, new credit 10% and mix 10%. So: never pay late (autopay the minimum), keep card balances under 30% of the limit, pay in full, and apply only for credit you need. No history yet? A secured card or credit-builder loan reported to all three bureaus starts one; debit cards, prepaid cards and payday loans don't.

Easy15 min to readFreeChecked October 2, 2026

What to know

Paying on time is the biggest piece.
  1. Know what it is. A credit score is a prediction of how likely you are to pay a loan back on time, calculated from your credit reports. Companies use it to decide on credit cards, car loans and mortgages, and also for tenant screening and insurance. It also sets the interest rate and credit limit you get. Most scores range from 300 to 850, and higher is better. Source: CFPB3
  2. Payment history counts most. FICO weighs it at about 35% of your score, Source: myFICO1 and the CFPB says most scores treat it as the number one factor. Source: CFPB2 Autopay at least the minimum on every account so a busy week never turns into a late payment. If you've missed payments, get current and stay current. Source: CFPB2
  3. How much you owe comes next, about 30%. Source: myFICO1 Scoring models look at how close you are to being maxed out. Experts advise using no more than 30% of your total limit. Source: CFPB2 On a card with a $500 limit, that means a balance of $150 or less.
  4. Length of history is about 15%. Source: myFICO1 The longer your record of paying as agreed, the more lenders have to go on. Source: CFPB2 Closing old cards and moving balances onto one card can hurt, because it raises the share of your limit you're using. Source: CFPB2
  5. New credit (10%) and credit mix (10%) are smaller. Source: myFICO1 Applying for a lot of credit in a short time can make lenders think you're having money trouble. Source: CFPB2 Apply only for what you need.
  6. You don't need to carry a balance or owe interest to build a score. Paying the full balance each month gets you the best scores and keeps interest at zero. Source: CFPB2
  7. Check your free score. Many card companies and lenders show your score on your statement or online account. Nonprofit credit counselors and HUD-approved housing counselors can often give you a free report and score and go over them with you. Source: CFPB4
Watch out You never need to pay a company to see your reports or to dispute an error. Checking your own report doesn't hurt your score. Source: CFPB6 And no one can remove accurate negative information for a fee. Source: CFPB

Starting from zero

Ask your bank, credit union or a nonprofit credit counseling agency about these. Their payments are reported to the three credit bureaus. Source: CFPB5

OptionHow it works
Secured credit cardYou put down cash, for example $500, and can spend up to that amount. Paying the bill frees up your limit again.
Credit-builder loanThe bank holds the loan money for you as savings. You pay it off in small payments, usually over 6 to 24 months, then get the full amount.
Store or gas station cardUsually a low limit, so it's harder to run up a big bill.

Before you sign up, ask whether the company reports your payments to Equifax, Experian and TransUnion.

What doesn't build credit

  • Debit cards and cash, because you aren't borrowing anything. Source: CFPB5
  • Prepaid cards. Source: CFPB5
  • Payday loans, even when you pay on time, because they're not reported to the nationwide bureaus. Source: CFPB5
  • "Buy here, pay here" car loans. These dealers often report only late payments, not on-time ones. Source: CFPB5

Habits that protect your score

  • Autopay at least the minimum on every card and loan. Source: CFPB2
  • Keep each balance under 30% of the limit, and pay in full when you can. Source: CFPB2
  • Keep old accounts open, and watch them for charges you didn't make. Source: CFPB2
  • Space out applications for new credit. Source: CFPB2
  • Check your reports free at AnnualCreditReport.com, because errors can lower your score for no reason. Source: CFPB4

See it done

Video by Khan Academy Nonprofit

What is a credit score?

Watch on YouTube: What is a credit score?

2022 · Checked October 3, 2026

Video won't load at school or work? No problem. Everything you need is in the steps; the video's just a bonus. Watch it on YouTube later.

If it doesn't work

  • If your score dropped and you don't know why, pull your reports and look for errors or accounts you didn't open. See Reading your credit report.
  • If you've fallen behind, get current and stay current. Recent on-time payments count. Source: CFPB2 A nonprofit credit counselor can help you plan for free or at low cost. Source: CFPB4

Good to know

The details, if you want them. Tap a line to open it.

You have more than one score

Scores depend on which bureau's data is used, which scoring model, and even the day. Lenders use different scores for different loans, so slightly different numbers are normal. Source: CFPB4 The weights above are FICO's averages for the general population, and they can differ for people with short histories. Source: myFICO1

What lenders look at besides the score

Your FICO score is calculated only from your credit report. A lender may also look at your income, how long you've had your job, and the kind of credit you're asking for. Source: myFICO1

Found an error?

You can dispute it online, by mail or by phone with each bureau. See Disputing errors on your report.

Take it with you

Printable cardDownload card (PDF)

Sources

  1. myFICO Company source: the maker of the FICO score What's in my FICO Scores?
  2. Consumer Financial Protection Bureau How do I get and keep a good credit score?
  3. Consumer Financial Protection Bureau What is a credit score?
  4. Consumer Financial Protection Bureau Where can I get my credit scores?
  5. Consumer Financial Protection Bureau Ways to start or rebuild a good credit history
  6. Consumer Financial Protection Bureau Does checking my credit report hurt my credit score?

Lesson M4.1 · Last checked October 2, 2026 against the sources listed.

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