The Ultimate Guide to Credit Scores in 2024
FICO vs. VantageScore, hard inquiries vs. soft pulls. We demystify the algorithm that determines your financial borrowing power.
S
By sarah-jenkins
Financial Analyst
Your three-digit credit score is arguably the most important number in your financial life. It determines if you can buy a house, what interest rate you’ll pay on a car, and sometimes even if you get hired.
Breakdown of a FICO Score
- Payment History (35%): The single biggest factor. Never miss a payment.
- Amounts Owed (30%): Specifically, your credit utilization ratio. Keep your balances below 30% of your limit.
- Length of Credit History (15%): Don’t close old cards, even if you don’t use them (unless they have fees).
- New Credit (10%): applying for too many cards at once signals risk.
- Credit Mix (10%): A blend of revolving credit (cards) and installment loans (mortgage/auto) is healthy.
How to Boost Your Score Fast
- Request a Limit Increase: If your income has gone up, ask for a higher limit. This instantly lowers your utilization ratio.
- Become an Authorized User: Piggyback on a family member’s excellent credit history.
- Dispute Errors: 1 in 5 Americans has an error on their credit report. Check AnnualCreditReport.com for free.