Understanding Credit Scores: What Actually Makes Your Score Go Up or Down?
Your credit score can affect whether you qualify for a credit card, car loan or mortgage. And, how much you will be charged to borrow the money. But your score does not measure your income, savings or overall financial success. It is calculated using information from your credit reports and is designed to help lenders evaluate lending risk.
Why Is the Score on My Credit App Different?
You do not have one universal credit score. Two major scoring systems are FICO and VantageScore. Both use information from your credit reports, but they do not calculate scores exactly the same way. Lenders may also use different scoring models depending on what you are applying for. So if an application shows a 720 and a lender gives you a different score, it does not automatically mean something is wrong. They are likely pulling from a different credit bureau or evaluating your file using a different scoring model.
What Actually Affects Your FICO Score?
FICO groups the information used to calculate its scores into five major categories:
| Factor | General Weight |
|---|---|
| Payment History | 35% |
| Amounts Owed | 30% |
| Length of Credit History | 15% |
| New Credit | 10% |
| Credit Mix | 10% |
These percentages are general guidelines. The exact effect depends on your individual credit history.
- Payment history: Do you pay accounts that report to the credit bureaus on time? Late and missed payments can hurt your score.
- Amounts owed: How much of your available credit are you using? If a credit card has a $1,000 limit and a $500 reported balance, you are using 50% of that available credit. This is called credit utilization.
- Length of credit history: How long have you been managing credit? Older accounts can help establish a longer credit history.
- New credit: Have you recently opened or applied for several accounts? Applications can create hard inquiries and new accounts can lower the average age of your credit history.
- Credit mix: Have you managed different types of credit, such as credit cards and installment loans? This matters, but do not take on unnecessary debt just to improve your credit mix.
Will Checking My Own Credit Hurt My Score?
No, checking your own credit report or credit score is a soft inquiry and does not lower your credit score. A hard inquiry usually happens when a lender checks your credit because you applied for new credit. One hard inquiry generally is not something to panic about.
What If You're Shopping for a Mortgage or Car Loan?
Credit scoring models recognize that people shop around for the best interest rate. When you apply for the same type of loan across multiple lenders within a designated window (usually 14 to 45 days), the scoring system treats all of those credit checks as one single inquiry. This allows you to compare interest rates and lender fees without taking repeated credit score hits. Keep in mind, this rule only applies to rate shopping for the same loan type. It doesn't apply if you're opening multiple credit cards, personal loans, etc. at once.
Does Making More Money Improve Your Credit Score?
Not directly, your salary and the amount of money in your bank account are not FICO scoring factors. Someone with a high income can have poor credit. Someone with a lower income can have excellent credit. Credit scores primarily evaluate how you manage the credit reported in your credit history, not how much money you have.
Why This Matters
You do not need to chase every movement in your credit score. Focus on what is behind the number.
Pay your accounts on time. Keep credit card balances low. Be thoughtful about applying for new credit. Review your credit reports for accuracy. Give your credit history time to grow. Your score is the result of what is happening in your credit history. Understand that history is more useful than watching the number fluctuate.
Sources: myFICO, AnnualCreditReport.com, Consumer Financial Protection Bureau