Maintaining good credit ensures you're set up for financial success in the future. Unfortunately, the majority of people do not understand their credit score and what factors play into their creditworthiness. This interactive infographic will explain to you the anatomy of a good credit score and why it matters for your overall personal financial health.
What is a good credit score?
Anatomy of Good Credit
Your credit score matters and is fundamental to your overall financial health. Without a good credit score, you could be turned down for the loans you want and need or could pay excessive interest charges.
A FICO (Fair Isaac and Company) score is the standard of assessing credit risk used by the three major credit reporting agencies: TransUnion, Experian, and Equifax. Your credit score is calculated based on an analysis of your credit report and represents your creditworthiness.Get Started
What Your FICO ® Score Means to Lenders
Lenders view you as a very risky borrower
579 or less
Some lenders will approve loans with this score
Most lenders consider this a good score
Lenders view you as a very dependable borrower
Lenders view you as an exceptional borrower
Roll over the scores to see how they stack up.
The FICO ® Score is the top 20% of U.S. consumers
The FICO ® Score is the top 40% of U.S. consumers
The FICO ® Score is near the average score of U.S. consumers
The FICO ® Score is below the average score of U.S. consumers
579 or less
The FICO ® Score is the lowest 20% of U.S. consumers
Roll over the body to see the Anatomy of Good Credit
Payment History: 35% of credit score
Like your brain stores memories, your payment history is a record of whether or not you've paid your bills on time. A good score reflects a history of on-time payments and no delinquencies.
Amounts Owed: 30% of credit score
Similar to how your body uses parts of food for energy, you should only be using part of your available credit. Total amounts owed on single accounts and on all accounts are factored, as well as the amounts owed on different types of accounts. The amount of debt to available credit you have is known as your credit utilization ratio.
- total balance on all cards
- ÷ the sum of account limits
- your credit utilization ratio
A good credit score shows a utilization ratio of 30% or less.
Length of Credit History: 15% of credit score
Our legs get us where we need to go. Your credit history shows where you’ve been, taking into account how long your credit accounts have been open, the age of your newest account, how long it has been since you used certain accounts, and an average age of all your accounts. In general, a long credit history is preferred over a short credit history because there’s more data to consider, making it easier to determine your credit risk.
Types of Credit: 10% of credit score
When you reach out and obtain new credit accounts, your credit report retains a log of all types of credit accounts in your name. Your credit score takes into consideration a mix of credit cards, installment loans, retail accounts, mortgage loans, and finance company accounts. A good credit score will have a mix of accounts that are in good standing. However, it's not necessary to have one of each and you should never open an account you don’t intend to use.
New Credit and Credit Inquiries: 10% of credit score
When you reach out for new credit, potential lenders will submit a credit inquiry to the credit bureaus to pull your credit. Credit inquiries will stay on your report for about 2 years. A good credit score will not show a large number of inquiries or accounts opened in a short period of time.
Make payments on time. If you are going to submit late, contact the company before payment is due to discuss your options.
Keep balances low and pay off as many accounts as possible.
Keep old credit accounts open, especially if you have a short credit history.
If you’re looking for a new line of credit, only apply for new accounts when you absolutely need them so your score doesn’t reflect a large number of inquiries and new accounts. However, if you are looking for loan rates on a mortgage or car loan and have numerous inquiries on the same type of loan in a short period of time, those inquiries won’t be counted as multiple inquiries.
Dispute and correct any errors on your credit report.
Monitor your credit score regularly and seek assistance when needed. Use CompareCards Credit Concierge to check your credit score for free, talk to a credit expert, and get tips and tricks for managing your credit health.