Finance
How are credit scores calculated?
A credit score is calculated from your borrowing history — mainly whether you pay on time, how much debt you carry, and how long you've used credit. Lenders use the resulting number to judge how risky it is to lend to you.
See it in motion.
Watch a 2-minute animated lesson that shows exactly how credit scores works.
Step by step
- 1Payment history (paying on time) is the biggest factor.
- 2How much of your available credit you're using also matters a lot.
- 3Length of credit history, new applications, and credit mix play smaller roles.
- 4A higher score means cheaper loans and easier approval.
Frequently asked questions
- What affects a credit score the most?
- Your payment history — consistently paying bills on time has the biggest positive impact.
- How can I improve my credit score?
- Pay on time, keep balances low relative to your limits, and avoid opening many new accounts at once.
- Why do lenders use credit scores?
- They give a quick, standardized estimate of how likely you are to repay borrowed money.