What Actually Moves Your Credit Score

Two of the five factors in a FICO score are worth 65% of it. One of those two you can move this month. The other takes years, and there is no shortcut, which is exactly why most of what gets written about credit scores concentrates on the remaining 35%.

Here are the weights, from FICO's own documentation, and then what each one actually means for something you might do this week.

The five factors and their weights

Those weights are published by FICO and apply to the general population. They shift for individual files: for someone with a very short history, length of credit history counts for more than 15%.

One thing to settle before going further. Nobody can tell you how many points an action is worth. FICO does not publish point values, and the effect of any change depends on everything else in your file. An article that tells you closing a card costs exactly 20 points has invented that number. We will describe direction and rough magnitude, and where we cannot, we will say so.

Payment history: the one that cannot be shortcut

35%, and it is simply whether you have paid on time.

The asymmetry here is brutal and worth understanding before anything else. Years of perfect payments build the factor slowly. One payment 30 days late damages it immediately and stays on your report for seven years, as the CFPB sets out in how long information stays on your credit report.

Three practical consequences.

A payment is not late until it is 30 days late, for reporting purposes. Miss the due date by four days and you will pay a late fee and possibly lose a promotional rate, and the bureaus will not hear about it. That is worth knowing in a bad month: pay something before day 29 and the report stays clean.

Automate every minimum, without exception. The entire 35% is protected by a standing instruction that costs nothing. Pay extra by hand if you like, but the minimum should never depend on you remembering.

Paying the minimum counts as paying on time. It does nothing for the 30% factor and it fully protects the 35% one. In a month where you can only do one thing, this is the one.

Amounts owed: the one you can change this month

30%, and most of it is revolving utilisation: the share of your card limits you are using.

This is the only factor that responds quickly, because it is recalculated from whatever balance your card reports each month. Pay the balance down and the next report shows a lower number.

Three things about it that are widely misunderstood:

The reported balance is the statement balance, not what you owe today. Someone who spends $7,400 a month on a $12,000 limit and pays in full every month still reports 61.7% utilisation, because the statement closes before the payment. Moving the payment to just before the statement date can report 6.2% instead, on identical spending. That single mechanic is the subject of credit utilisation and the statement-date trick.

30% is not a target, it is a ceiling nobody should be near. Lower is better all the way down, and the best-scoring files sit in low single digits with a small balance reported rather than zero.

Both the overall figure and the per-card figure matter. One card at 95% while the others are empty is worse than the overall percentage suggests.

The three that matter less than people think

Length of credit history, 15%. The age of your oldest account and the average age of all of them. You cannot accelerate this. You can damage it, and the usual way is closing the oldest card because it is unused, which is the decision in should you close an old credit card. The right move is almost always to keep it open with a small recurring charge on it.

Credit mix, 10%. Whether you have both revolving accounts and instalment loans. It is real and it is 10%, and taking out a loan you do not need in order to improve it is a bad trade: you would pay interest to move a tenth of a score. Let your mix be whatever your life produces.

New credit, 10%. Recent applications and recently opened accounts. A hard inquiry costs a few points and fades within months, and several in a short period looks worse than one. The exception is rate shopping, where multiple mortgage or car applications inside a short window count as one. That is covered in hard against soft credit inquiries.

What does not affect it at all

This list is longer than people expect, and everything on it appears somewhere in the folklore.

• Your income, your job title and how long you have worked there
• Your savings and investment balances
• Your age, marital status, race or where you live
• Checking your own credit report or score, which is a soft inquiry
• Using a debit card, or not having a credit card at all (though that leaves you with no history, which is a different problem)
• Carrying a balance, which helps nothing and costs interest

The CFPB's page on what a credit score is is the plain-language version of the same list.

One profile, three changes

A file with four cards, $24,000 of total limits, $3,100 reported across them, a nine-year oldest account and no late payments. Three things this person might do:

Notice that the second row is the one people volunteer for. Closing a card feels like responsible housekeeping and it raises your utilisation the same day, because the limit disappears while the balance does not.

We are deliberately not attaching point values to any of those rows. The direction is knowable; the magnitude is not, and a table of invented points would be the most useful-looking and least true thing on this page.

Score ranges, and what each unlocks

The practical point is that these are bands rather than a continuum. Going from 748 to 792 changes nothing for most lending. Going from 738 to 742 can change a mortgage rate. If you have a specific application coming, find out the threshold that matters for it and aim at that, rather than at a higher number in general.

When this does not apply

If you have no credit history at all. None of the five factors has much to work with, and the problem is establishing a file rather than optimising one. A secured card or authorised-user status on someone else's long-standing account is the usual route, and it takes about six months to produce a score.

If there is an error on your report. Optimising is pointless while something inaccurate is dragging the file. Fix that first: you have a legal right to an investigation, and the process is in disputing an error on your credit report.

If you are in active collections or default. The five factors still describe the model, and none of the advice above is the priority. Dealing with the debt is, and the score recovers behind it.

If the score you are looking at is not the one the lender will use. There are many FICO versions plus VantageScore, and free consumer scores are often a different model from the one a mortgage lender pulls. Use free scores to watch the direction of travel, not the number.

If you are more than six months from applying for anything. Then the highest-value action is simply automating every minimum and keeping utilisation low, and checking the score monthly will tell you nothing you can act on.

Next steps

1. Pull all three reports free at AnnualCreditReport.com, the site named in federal law. Read them for errors before doing anything else.
2. Automate every minimum payment. This protects 35% of the score permanently.
3. Work out your reported utilisation, per card and overall, and find your statement dates.
4. If it is above about 10%, pay down before the statement closes rather than after.
5. Do not close your oldest card, and do not apply for anything in the six months before a mortgage application.