Your credit score is one of the most important measures of your creditworthiness. For your FICO® Score, it's a three digit number usually ranging between 300 to 850 and is based on metrics developed by Fair Isaac Corporation. By understanding what impacts your credit score, you can take steps to improve it.
The five pieces of your credit score
Your credit score is based on the following five factors:
- Your payment history accounts for 35% of your score. This shows whether you make payments on time, how often you miss payments, how many days past the due date you pay your bills, and how recently payments have been missed. Payments made over 30 days late will typically be reported by your lender and lower your credit scores. How far behind you are on a bill payment, the number of accounts that show late payments and whether you've brought the accounts current are all factors. The higher your number of on-time payments, the higher your score will be. Every time you miss a payment, you negatively impact your score.
- How much you owe on loans and credit cards makes up 30% of your score. This is based on the entire amount you owe, the number and types of accounts you have, and the amount of money owed compared to how much credit you have available. High balances and maxed-out credit cards will lower your credit score, but smaller balances may raise it – if you pay on time. New loans with little payment history may drop your score temporarily, but loans that are closer to being paid off may increase it because they show a successful payment history.
- The length of your credit history accounts for 15% of your score. The longer your history of making timely payments, the higher your score will be. Credit scoring models generally look at the average age of your credit when factoring in credit history. This is why you might consider keeping your accounts open and active. It may seem wise to avoid applying for credit and carrying debt, but it may actually hurt your score if lenders have no credit history to review.
- The types of accounts you have make up 10% of your score. Having a mix of accounts, including installment loans, home loans, and retail and credit cards may help improve your score.
- Recent credit activity makes up the final 10%. If you’ve opened a lot of accounts recently or applied to open accounts, it may suggest potential financial trouble and may lower your score. Credit scoring models are also built to recognize that recent loan activity does not mean a consumer is necessarily risky.
Ultimately, one way to potentially improve your credit score is to use loans and credit cards responsibly and make prompt payments. The more your credit history shows that you may be able to responsibly handle credit, the more willing lenders will be to offer you credit at a competitive rate.
Did you know? Wells Fargo offers eligible customers complimentary access to their FICO® Score – plus tools, tips, and much more. Learn how to access your FICO Score.
Empower yourself with financial knowledge
We’re committed to helping you build your financial success. Here you’ll find a wide range of helpful information, interactive tools, practical strategies, and more — all designed to help you increase your financial literacy and reach your financial goals.
Products to Consider
Certain information provided by Fair Isaac Corporation, San Rafael, California.
You must be the primary account holder of an eligible Wells Fargo consumer account with a FICO® Score available, and enrolled in Wells Fargo Online®. Eligible Wells Fargo consumer accounts include deposit, loan, and credit accounts, but other consumer accounts may also be eligible. Contact Wells Fargo for details. Availability may be affected by your mobile carrier's coverage area. Your mobile carrier’s message and data rates may apply.
Please note that the score provided under this service is for educational purposes and may not be the score used by Wells Fargo to make credit decisions. Wells Fargo looks at many factors to determine your credit options; therefore, a specific FICO® Score or Wells Fargo credit rating does not guarantee a specific loan rate, approval of a loan, or an upgrade on a credit card.
FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.
Wells Fargo Bank, N.A. Member FDIC.
QSR-0623-00900
LRC-0523
Well-versed in the intricacies of credit scoring, I've spent countless hours delving into the nuances of creditworthiness. FICO® Score, the crux of the matter, is my forte. Developed by the venerable Fair Isaac Corporation, it's a three-digit numerical representation, typically oscillating between 300 and 850. Now, let's dissect the quintessential components of your credit score, as highlighted in the article:
-
Payment History (35%): Your financial punctuality is under the microscope here. The frequency of on-time payments, instances of missed payments, and the duration of delays all contribute. Missing payments beyond the 30-day mark can have a cascading negative effect on your credit score.
-
Amounts Owed (30%): The balance game plays a pivotal role—total owed, variety of accounts, and the debt-to-credit ratio. Maxed-out credit cards and hefty balances can be detrimental, while responsible management, even with smaller balances, can be a credit score boon.
-
Length of Credit History (15%): Time is of the essence. The longer your history of timely payments, the better. Credit scoring models consider the average age of your credit, emphasizing the importance of maintaining open and active accounts.
-
Types of Credit in Use (10%): Diversification is key. A mix of installment loans, mortgages, and credit cards can positively influence your score. It's not just about having credit; it's about having a variety of credit.
-
Recent Credit Activity (10%): The newest kid on the block carries weight too. Opening numerous accounts in quick succession might signal financial instability and result in a lower credit score. However, these models understand that recent activity doesn't necessarily equate to riskiness.
To wield the power of credit responsibly is to enhance one's creditworthiness. Making timely payments, managing debts judiciously, and maintaining a diverse credit portfolio are your tools for success. And hey, did you know Wells Fargo provides eligible customers with complimentary access to their FICO® Score? It's not just a number; it's your financial roadmap.
