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How are Credit Scores Calculated?

There are 5 factors that go into calculating a credit score. Learn what each of them are and how you can improve your score within 30 days.

how to calculate credit score

A good credit score opens up more opportunities for loans and credit cards with more favorable terms (which usually means a lower interest rate at the very least). But what exactly makes up a credit score?

The Components of a Credit Score

The 5 main factors that go into a credit score calculation are:

Payment History (35%)
Total Amount Owed (30%)
Length of Credit History (15%)
New Credit (10%)
Types of Credit (10%)

Payment History

Payment History typically makes up the biggest chunk of your credit score (35% of your total credit score). This tells the credit bureau what your past track record of paying off your debts are. The longer your track record is of making payments on time, the better your credit score will be. Usually, it takes about 6 months of on-time payments to improve your score, so this is very much a long term fix. Again, it's all about creating a pattern, just making on-time payments once won't show that you're able to consistently do it.