The most widely used credit score in the United States is the FICO score, developed by the Fair Isaac Corporation and first introduced in 1989. It ranges from 300 to 850, with higher numbers signaling lower risk to lenders deciding whether to approve a loan and at what interest rate.
The score is built from five weighted categories: payment history at roughly 35%, amounts owed or credit utilization at about 30%, length of credit history at 15%, new credit inquiries at 10%, and the mix of credit types at 10%. Payment history alone carries more weight than any other single factor.
The Five Factors Behind the Number
Why the Same Behavior Can Score Differently
A single hard inquiry, applying for a new credit card or loan, typically causes only a small, temporary dip. Closing an old account can hurt more than expected, though, because it can shorten your average credit history and shift your utilization ratio even if you never carried a balance on it.
Different scoring models don't always agree. FICO and VantageScore weigh the same underlying data somewhat differently, so the same person can see two different numbers depending on which model a lender checks. In the UAE, Al Etihad Credit Bureau has issued similar credit reports and scores since 2014, serving a comparable role for regional lenders.
Sources
- Consumer Financial Protection Bureau β how credit scores are calculated
- Investopedia β FICO score factors explained
- Al Etihad Credit Bureau β UAE credit reporting system
FAQ
What hurts a credit score the most?
Missed or late payments carry the heaviest weight of the five scoring factors, since payment history alone accounts for roughly 35% of a standard FICO score.
Does checking your own credit score lower it?
No, checking your own score is treated as a "soft inquiry" and has no effect on the number, unlike a "hard inquiry" triggered when a lender checks it for a loan application.
Why might two different apps show two different credit scores for the same person?
Different scoring models, such as FICO and VantageScore, weigh the same financial data somewhat differently, so it's normal for the numbers to not match exactly.
About the Author
We reference Consumer Financial Protection Bureau, Investopedia, Al Etihad Credit Bureau to explain the background and current understanding of this topic.
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