What a credit score actually is
A credit score is a three-digit number, built from the information in your credit report, that predicts how likely you are to repay debt as agreed. It's not a report card on your character or income — it's a statistical prediction based on your borrowing and repayment history, nothing more.
The most widely used version is the FICO Score, developed by the Fair Isaac Corporation and used by the large majority of lenders. The exact algorithm is a closely held trade secret, but the five factors that go into it, and roughly how much each one is weighted, are public information.
The five FICO factors
Two things carry roughly two-thirds of your score between them: payment history and credit utilization. If you only manage two factors well, those are the two that matter most.
Worth flagging: mortgage lending specifically is in the middle of a real transition as of 2026 — Fannie Mae and Freddie Mac now allow VantageScore 4.0 alongside Classic FICO, with FICO 10T approved but still in limited rollout. This is an evolving, lender-by-lender process, not a completed switch, so the factors above remain the reliable foundation regardless of which specific model a given lender ends up using.
What counts as a good score
670 and above is generally considered a reasonably strong score by most mainstream lenders. The best rates and terms — on mortgages especially — are usually reserved for 740 and up, which is part of why the Home Buying guide flags credit score as one of the biggest levers on your actual borrowing costs.
What's NOT in your credit score
People frequently assume things belong in this calculation that legally don't:
- Income or employment status — not a factor at all, though a lender may separately ask about it when you apply for credit
- Savings or checking account balances — irrelevant to the score itself
- Age, marital status, race, religion, or national origin — illegal for scoring models to consider, under the Equal Credit Opportunity Act
- Rent payments — generally excluded unless you specifically use a rent-reporting service that submits that data to a credit bureau
FICO vs. VantageScore
FICO isn't the only model in use — VantageScore is a real competitor, and the weighting differs in a way that actually matters:
| Factor | FICO | VantageScore 3.0 |
|---|---|---|
| Payment History | ~35% | ~40% |
| Utilization | ~30% | ~20% |
VantageScore leans even harder on payment history and slightly less on utilization compared to FICO. In practice, the habits that improve one almost always improve the other — the two models agree on what matters most, even if they weight it a little differently.
See it in context
Credit score and home affordability are directly linked
The difference between a 620 and a 760 score can shift your mortgage rate by half a point or more — tens of thousands of dollars in buying power on the same income.
See How Much House You Can Afford →Mistakes people make understanding their score
- Assuming checking your own score hurts it. Checking your own credit is a soft inquiry and doesn't affect your score, regardless of how many times you do it.
- Closing old credit cards to "clean up" credit. This can shorten your average account age and reduce total available credit, both of which can lower your score rather than help it.
- Thinking one missed payment is permanent. Late payments hurt, but an otherwise strong history can outweigh one or two isolated instances — it's a pattern that matters most, not a single event.
- Ignoring utilization until right before a big application. Utilization is recalculated every billing cycle, which means it responds faster than almost any other factor — a real advantage if addressed with enough lead time before applying for major credit.
Frequently asked questions
What are the five factors in a FICO score?
Payment history (about 35%), amounts owed / credit utilization (about 30%), length of credit history (about 15%), new credit (about 10%), and credit mix (about 10%). Payment history and utilization together make up roughly two-thirds of the score.
What's a good credit score?
On the standard 300-850 FICO scale: Poor is 300-579, Fair is 580-669, Good is 670-739, Very Good is 740-799, and Exceptional is 800-850. Most mainstream lenders consider 670 and above a reasonably strong score, though the best rates are usually reserved for 740 and up.
Does my income affect my credit score?
No. Income, employment status, savings account balances, age, and marital status are not part of a credit score calculation at all. Lenders may separately ask about income when you apply for credit, but it has no direct effect on the score itself.
Is FICO the only credit score that matters?
It's the most widely used by lenders, but VantageScore is a real competing model with a meaningfully different weighting — payment history counts for about 40% instead of FICO's 35%, and utilization counts for about 20% instead of 30%. Which score a lender actually pulls depends on the lender and the type of credit you're applying for.
This article is for educational purposes and does not constitute financial advice.