How do credit scores work?
A credit score is a number, on many scales from 300 to 850, that estimates how likely you are to repay borrowed money based on your credit reports. FICO says it weighs five categories by approximate share: payment history 35%, amounts owed 30%, length of credit history 15%, credit mix 10% and new credit 10%.
Free, no account. Checked October 13, 2026.
The five categories
Payment history is whether you paid past accounts on time. It carries the largest share, about 35%.
Amounts owed is about 30%. It includes credit utilization, which compares your reported card balances with your credit limits.
Length of credit history is about 15%. Credit mix is about 10% and covers the types of credit you hold, such as cards and installment loans. New credit is about 10% and includes hard inquiries.
These are FICO's approximate weights. Actual weights vary by person, and other scoring models differ.
A report and a score are different things
Your credit reports list your accounts and payment records. A score is a calculation from that report. Lenders use different scoring models alongside your income, debts and other information, so you do not have one score.
AnnualCreditReport.com provides free reports, not scores. Your bank may offer a free score, so note which model it uses and the date. Checking your own report does not lower your score.
Review the underlying accounts for errors. If one is wrong, you can dispute it with the reporting company and the information provider.
How utilization is counted
Utilization is the reported revolving balance divided by available credit. You can work it out for each card and for all cards together, and scoring models can look at both.
A figure of 30% is a rule of thumb, not a cliff. Lower balances can help, but no threshold guarantees a particular score. Card issuers report at different times, often around the statement date.
What a score does not tell you
A score estimates repayment risk. It is not a measure of your worth or wealth. Better credit can improve borrowing terms, but no score guarantees approval or a rate, and each lender sets its own cutoffs.
When you compare loan offers, compare the annual percentage rate (APR), fees, term and total repayment cost for the same balance.
A worked example
Sample, not your numbers
Utilization on one card and on two
Sample numbers, not yours. You owe $800 on a card with a $2,000 limit and a second card with a $3,000 limit that has no balance.
- Card one: $800 of $2,000
- 40%
- Both cards: $800 of $5,000
- 16%
- Card one after a $500 payment: $300 of $2,000
- 15%
- Both cards after the payment: $300 of $5,000
- 6%
The arithmetic is exact. The score change is not, because it depends on the scoring model and the rest of your report.
Run your own numbers
Enter your balances and limits to see utilization for each card and overall.
Common questions
Does checking my own credit report lower my score?
No. Checking your own report does not lower your score. Hard inquiries come from applying for new credit.
What score do I need to be approved?
There is no single cutoff. Each lender sets its own approval criteria and also looks at income and debts. FICO labels scores of 800 to 850 exceptional, and past a point lenders may not treat a higher score differently.
Can a company repair my credit for a fee?
Under the federal Credit Repair Organizations Act, a credit repair company cannot charge you before it has finished the service. You can dispute errors yourself for free using your credit reports.
Go further in the course
Chapters 1 to 3 are free, no card needed. Chapters 2 and 3 cover the bank accounts and monthly budget that make on-time payments possible.
Sources
- FICO: what is in your credit score (opens in a new tab)
- AnnualCreditReport.com: free credit reports (opens in a new tab)
- CFPB: credit reports and scores (opens in a new tab)
Figures checked on October 13, 2026. The weights are approximate and are FICO's. Other scoring models weigh things differently. The example is arithmetic, not a score prediction.
Education, not financial, tax or legal advice. The example uses sample numbers, and your own situation will differ.