The FICO Score: The Number That Matters Most
There are dozens of credit scoring models, but FICO scores are the ones used in approximately 90% of lending decisions. Your FICO score ranges from 300 to 850. Lenders use it to predict how likely you are to repay a loan on time. The higher your score, the lower the risk — and the better the terms you'll be offered.
| Score Range | Rating | What It Means for Lending |
|---|---|---|
| 800–850 | Exceptional | Best rates available; easy approval |
| 740–799 | Very Good | Better-than-average rates on most products |
| 670–739 | Good | Qualifies for most loans; standard rates |
| 580–669 | Fair | Higher rates; some products restricted |
| Below 580 | Poor | Limited approval; secured products or co-signer needed |
The Five Factors (and Their Weights)
FICO calculates your score using five factors. The weights are publicly known — use them to prioritize your efforts:
| Factor | Weight | What It Measures |
|---|---|---|
| Payment History | 35% | Do you pay on time? One missed payment can drop your score 60–110 points. |
| Amounts Owed (Utilization) | 30% | How much of your available credit are you using? Below 30% is good; below 10% is best. |
| Length of Credit History | 15% | How long have your accounts been open? Older is better. |
| Credit Mix | 10% | Do you have a mix of credit types (cards, auto, mortgage)? Variety helps modestly. |
| New Credit | 10% | How many recent applications? Each hard inquiry can drop your score 5–10 points. |
Payment History: The Most Important Factor
At 35% of your score, payment history has more impact than any other factor. A single 30-day late payment can drop a good score by 60 points or more — and it stays on your report for 7 years. The fix is simple but requires discipline: pay every bill on time, every month, without exception.
Credit Utilization: The Fastest Factor to Improve
Utilization is your total credit card balances divided by your total credit limits. If you have $5,000 in limits and carry a $2,500 balance, you're at 50% utilization — which hurts your score.
The sweet spot is under 30% total, with under 10% being optimal for the highest scores. This is also the fastest factor to improve: if you pay down your balances, your score can improve within one billing cycle when your card issuer reports the new balance to the bureaus.
Two ways to improve utilization:
- Pay down balances — the most direct path
- Request a credit limit increase — this increases the denominator and lowers your utilization ratio, as long as you don't add new debt
Length of History: Play the Long Game
This factor rewards you for keeping old accounts open. If you have a credit card you've had for 10 years and rarely use, don't close it. Closing it removes that history from your average account age calculation and can hurt your score — even if you never carry a balance on it.
New Credit: Don't Over-Apply
Every time you apply for new credit, the lender does a "hard inquiry" that can drop your score slightly. Multiple applications in a short window signal risk to lenders. Space out applications for new credit, and only apply when you need it.
Exception: when shopping for a mortgage or auto loan, multiple inquiries within a 14–45 day window are typically treated as a single inquiry by FICO. Rate shopping for these loan types won't hurt you if you do it quickly.
What Doesn't Affect Your Score
- Income, savings, or employment status
- Checking your own credit (soft inquiries)
- Race, gender, age, or marital status (illegal to consider)
- Where you live
- Debit card usage
Free Ways to Monitor Your Score
You're entitled to free credit reports from all three bureaus (Equifax, Experian, TransUnion) at AnnualCreditReport.com. Review them annually and dispute any errors — mistakes are common and can unfairly drag down your score. Many credit cards and banks also offer free FICO score monitoring as a cardholder benefit. KCCU members should check what monitoring tools are available through your membership.