FICO scores (used by 90% of top lenders) range from 300–850. They are calculated from five specific factors with publicly disclosed weights. Most people focus on the wrong things — like closing old credit cards, which can actually hurt your score.
The Five Factors (With Real Weights)
- 1.Payment History — 35%: Have you paid every bill on time? Even one 30-day late payment can drop your score 50–100 points and stays on your report 7 years.
- 2.Amounts Owed (Credit Utilization) — 30%: The ratio of your current balances to your total credit limits. Staying below 10% is ideal; below 30% is acceptable. This updates monthly and can be improved immediately.
- 3.Length of Credit History — 15%: Average age of all accounts. This is why closing old cards hurts — it lowers your average age.
- 4.Credit Mix — 10%: Having both revolving credit (cards) and installment loans (mortgage, auto, student) shows lenders you can manage multiple types.
- 5.New Credit — 10%: Hard inquiries from new credit applications stay on your report 2 years and temporarily lower your score. Rate shopping for mortgages/auto loans counts as one inquiry if done within 45 days.
What Moves the Needle Fastest
Credit utilization (30% of score) updates every month when your statement closes. If you have a $10,000 credit limit and a $4,000 balance, your utilization is 40% — damaging. Pay it to $500 before your statement date, and your score can rise 30–60 points in a single billing cycle.
You can request a credit limit increase without closing any cards. A higher limit on the same balance immediately lowers utilization. Call your credit card company and ask — many approve instantly.
Why Your Score Matters More Than You Think
A 100-point difference in credit score on a 30-year $400,000 mortgage can mean $100,000+ in additional interest paid. On a 620 score (fair) vs 760 score (excellent), mortgage rates typically differ by 1.0–1.5%. On $400,000 over 30 years, 1.25% difference = $97,000 in additional interest.
The Fastest 6-Month Credit Score Improvement Plan
- 1.Month 1: Pull your free credit reports at AnnualCreditReport.com. Dispute any errors — 1 in 5 reports have mistakes, and lenders are required to fix errors within 30 days.
- 2.Month 1: Pay down credit card balances to under 10% of each card's limit.
- 3.Month 2–3: Set up autopay for all accounts (even minimum) to ensure no missed payments.
- 4.Month 3: Request credit limit increases on existing cards (does not require hard inquiry at most issuers).
- 5.Month 4–6: Do not open any new accounts or apply for credit. Let your accounts age.
A credit score of 760+ gets you "excellent" rates on virtually every loan product. Going from 680 to 760 is achievable in 6–12 months with focused effort — and worth tens of thousands of dollars over a lifetime of borrowing.