Answered from cited sources · retrieved September 20, 2026
how do credit scores work
A credit score is a number that predicts your likelihood of repaying debt on time, based on your credit history. Lenders use it to decide whether to approve your applications and what interest rates to offer.
A credit score is a numerical estimate of your creditworthiness, representing how likely you are to repay borrowed money on time. Lenders, landlords, and insurers use these scores to assess risk when you apply for loans, credit cards, or other services. Scores are generated by mathematical models that analyze information in your credit reports, such as your payment history and debt levels. A higher score generally indicates lower risk, which can help you qualify for better interest rates and loan terms. Because different lenders use different models and data sources, your score can change frequently and differ depending on where you check it.
- Payment History. Payment history is typically the most significant factor, as it shows whether you have paid past accounts on time. Late payments, collections, and bankruptcies negatively impact this score.
- Amounts Owed (Credit Utilization). This measures how much of your available credit you are using. Experts often recommend keeping your balances below 30% of your total credit limits to avoid appearing overextended.
- Length of Credit History. Models consider the age of your oldest and newest accounts, as well as the average age of all your accounts. A longer, established history generally benefits your score.
- New Credit and Credit Mix. Applying for multiple new accounts in a short period can trigger hard inquiries, which may temporarily lower your score. A diverse mix of credit types, such as credit cards and installment loans, can also be a factor.
Sources
- Understand your credit score | Consumer Financial Protection Bureauconsumerfinance.gov
- Credit Scores | Consumer Adviceconsumer.ftc.gov · published November 7, 2023
- What is a Credit Score? | myFICOmyfico.com · published October 19, 2018
- How are FICO Scores Calculated?myfico.com
- How Are Credit Scores Calculated?equifax.com
- What is a credit score?consumerfinance.gov · published September 2, 2026
- How Is Your Credit Score Calculated?experian.com · published December 15, 2025
- Understand, get, and improve your credit scoreusa.gov · published November 13, 2025
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