How is Your Credit Score Calculated?

3 min readJan 3

Credit can be a scary topic and rightfully so, many American’s weren’t financially educated about what their credit score even is. Despite that 3 digit number having a 6 digit impact on their financial well being.

With that being said I am going to provide you with the financial education that is lacking in nearly all schools across the United States so you never have to have bad credit again.

Man looking at blackboard with the range of credit scores on it.

First and foremost, I am referencing the FICO 8 scoring model that is the most wildly used scoring model today.

35% Credit History

This is the largest portion of what makes up your credit and it is a behavioral aspect of how your score. What this means simply is don’t have late payments. Even if you can’t pay your whole balance on a card ALWAYS pay the minimum payment. One late payment can hurt your score upwards of 60 Points!!
Now if you already had a missed payment you can send Late Payment Forgiveness Letters to your creditors in an attempt to get the late payments removed. If they refuse, you can dispute the late payments.

30% Utilization

The second largest factor of what makes up your credit is Utilization. This has to do with credit cards, if you have a credit card with a $1,000 credit limit you want to keep your utilization between 9%-30%. This means utilizing $90- $300 of that $1,000 limit. Now you can use more than that throughout the month but it needs to be paid off to below that utilization 3–5 days BEFORE your statement due date. That’s when your utilization is reported to the three credit bureaus.

15% Length of Credit

By not getting a credit card you are missing out on building 15% of your credit, you have to establish lines of credit and typically it is bad to close a card that is in good standing because it cuts off your credit history for that line of credit.

10% New Credit Inquires

No matter what you are applying for, a credit card, a mortgage, or even a car loan, your credit will be pulled and it will hurt your score. My best advice is to make sure your score is in the best shape possible before any hard pulls so that way you can at least get approved.

If you are credit invisible a good way to start building your credit is a secured card. That is 100% chance of approval and no credit pull.

10% Types of Credit

You want to be diversified in your credit lines. For example a credit card is revolving credit while a car loan is an installment loan. You want to show the credit bureaus that you are reliable with more than one form of credit.

I hope this helped! Comment any questions you may still have!


I am a realtor and nationwide credit repair agent. I love entrepreneurship, psychology, and lucid dreaming!