Credit scores explained, without the jargon

A credit score is a three-digit number that predicts how likely you are to repay borrowed money on time. Lenders use it as a quick, standardized way to gauge risk when you apply for a credit card, car loan, mortgage or apartment. A higher score signals lower risk, which usually translates into easier approval and lower interest rates.

The score is calculated from the information in your credit reports, the detailed records that three national credit bureaus (Equifax, Experian and TransUnion) keep about your borrowing. A scoring model reads that report and turns your history into a number. The two model families most lenders use are FICO and VantageScore, and both most commonly use a 300 to 850 range.

FICO groups scores into broad tiers. The exact cutoffs a given lender uses can vary, but these published ranges are a useful guide to where you stand and what to expect.

You do not need a perfect 850 to get the best pricing. Once you reach the top tier, most lenders treat you the same, so the practical goal is to cross into the range your goal requires, not to chase the maximum.

FICO publishes the approximate weight it gives to five categories. The exact math is proprietary and depends on your full profile, but these weights show where your attention pays off most.

Payment history (35%)

Nothing matters more than paying on time. A single payment reported 30 or more days late can meaningfully lower your score and stay on your report for up to seven years. Setting up at least the minimum payment on autopay is the highest-value habit for protecting your score.

Amounts owed and utilization (30%)

Credit utilization is the share of your available revolving credit that you are using. If your cards have a combined limit of $10,000 and you owe $3,000, your utilization is 30%. Lower is generally better, and many people see their score improve as utilization drops. A common rule of thumb is to keep it under 30%, but there is no penalty for going lower.

Length of history, new credit and mix (about 35% combined)

The remaining factors carry less weight individually. A longer average account age helps, which is why closing your oldest card can backfire. Each application usually adds a hard inquiry that can shave a few points temporarily. A mix of account types can help modestly, but you should never take on a loan you do not need just to add variety.

FICO and VantageScore are competing scoring models. Most mortgage and many lending decisions still rely on FICO, while free scores you see from banks and apps are frequently VantageScore. Both use the same underlying report data and both reward on-time payments and low utilization, so improving one generally improves the other.

You do not have one score, you have many. There are multiple versions of each model, tuned for cards, autos or mortgages, and each can be calculated from any of the three bureaus. A lender might pull a different combination than the free score you monitor, so small differences between numbers are normal and usually not worth worrying about.

1. 1Get your full credit reports for free from all three bureaus at AnnualCreditReport.com, the federally authorized source. Reports show the history behind your score.
2. 2Check a free score through your bank, credit-card issuer or a free credit app. Many issuers now display a FICO or VantageScore on your statement or dashboard at no cost.
3. 3Note which model and bureau each score uses so you are comparing like with like over time.

If your goal is to raise your number, start with our guide to building credit, which turns these factors into a concrete plan.