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What is a credit score and how is it calculated?

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Your credit score affects many areas of your financial life, from getting approved for a credit card to the interest rate you’ll pay on your mortgage. It’s important to understand the number and how it is calculated so you can set yourself up for financial success.

What is a credit score?

A credit score is a number that helps lenders, like banks, insurance companies and landlords assess how well you’ve managed your financial obligations. It is one of several factors they may consider when deciding a rate of pay for services, whether to loan you money or whether to enter into a business agreement.

What makes up your credit score?

Your credit score is determined by using information in your credit report. There’s no single formula for calculating a credit score, but here are the factors that FICO, the leading credit score provider, generally considers:

35 percent payment history

Payment history

Before lenders extend credit to you, they want to know if you pay your bills on time. Always make at least the minimum payment by the due date.

30 percent Amounts owed

Amounts owed

High balances can hurt your score. Lenders prefer that you use less than 30 percent of your available credit. You may be able to check what percent you’re using on your account page on your bank’s website.

15 percent Length of credit history

Length of credit history

Your score considers how long you’ve been using your credit accounts. Generally, longer is better.

10 percent types of credit

Types of credit

Having a mix of loan types—such as credit cards, student or auto loans and mortgages—is good for your score. It shows lenders you can handle multiple payments at the same time.

10 percent credit inquiries

Credit inquiries

Lenders see you as a bigger risk if you apply for, or open, several new credit accounts in a short period of time.

The weight assigned to each category can vary depending on your individual circumstances. If you’re just starting to establish credit, the factors used to calculate your score may be different than for someone who has a longer credit history.

Did you know?

Closing old credit card accounts can hurt your credit score. That’s because calculations consider the length of your credit history and your total available credit. Closing an account, even if you’re not using it, could reduce both. Instead, consider using the card occasionally for a small purchase and paying off the balance in full. There are other ways to improve your credit score, too.

What do the numbers mean?

Credit scores typically range from 300 to 850 and they can change monthly—for better or worse—based on your actions. Scores for most people—67 percent—fall in the “good” range and above.


The average American’s credit score

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•    300–579 Poor
•    580–669 Fair
•    670–739 Good
•    740–799 Very good
•    800–850 Exceptional

Where can I get my credit score?

A cell phone marking 670-739 credit score

A growing number of banks, loan companies and credit card issuers, including Bank of America, provide scores for free on statements or through online banking and mobile apps. If your bank doesn’t provide that service, you may have to pay to get your credit score. You can buy your FICO credit score at

Under federal law, you’re entitled to a free credit report every year from each of the three major credit bureaus—Equifax, Experian and TransUnion—but many people are surprised to learn that the credit score usually isn’t included in the report. Remember, the credit bureaus don’t always collect the exact same information, or evaluate it in the exact same way, so your score from each one could be different.

Quick tip

Fixing credit report errors, such as the same debt listed more than once or accounts incorrectly reported as late or delinquent, is one of the quickest ways to boost your credit score. It’s a good idea to check your reports every year via The federal Consumer Financial Protection Bureau has a helpful guide for correcting mistakes.

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2024 Bank of America Corporation.

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