How Credit Scores Work — Complete Guide to FICO & VantageScore 2026

Credit scores are three-digit numbers (300-850) that predict your likelihood of repaying debt. FICO scores, used by 90% of lenders, are calculated from five factors: payment history (35%), credit utilization (30%), length of credit history (15%), credit mix (10%), and new credit (10%).

What Is a Credit Score?

A credit score is a numerical representation of your creditworthiness based on information in your credit reports. Lenders, landlords, insurers, and employers use credit scores to evaluate risk. The two main scoring models are FICO (Fair Isaac Corporation) and VantageScore.

FICO Score Ranges

RangeRatingImpact
800-850ExceptionalBest rates, instant approval
740-799Very GoodLow rates, easy approval
670-739GoodStandard rates, most approvals
580-669FairHigher rates, some denials
300-579PoorLimited options, high rates

The 5 FICO Scoring Factors

  1. Payment History (35%): On-time payments are the single most important factor
  2. Credit Utilization (30%): Keep balances below 30% of credit limits; below 10% is ideal
  3. Length of Credit History (15%): Older accounts help your score
  4. Credit Mix (10%): Having different types of credit (cards, loans, mortgage) helps
  5. New Credit (10%): Too many new accounts or inquiries can lower your score

How to Improve Your Credit Score

Try our Credit Score Simulator | Browse Score Ranges | Score Improvement Guide

Frequently Asked Questions

What is a good credit score?
A FICO score of 670 or above is generally considered good. Scores above 740 are considered very good, and scores above 800 are exceptional. However, lender requirements vary.
How often do credit scores update?
Credit scores can change whenever new information is reported to the bureaus. Most creditors report monthly, so scores typically update every 30-45 days.
Do checking your own score lower it?
No. Checking your own credit score is a soft inquiry and does not affect your score. Only hard inquiries from lender applications can temporarily lower your score.
How much can removing a collection raise my score?
Removing a single collection can raise a FICO score by 50-100+ points, depending on the overall credit profile. The impact is greater for consumers with fewer negative items.
What is the difference between FICO and VantageScore?
FICO is used by about 90% of lenders. VantageScore was created by the three credit bureaus as a competitor. Both use 300-850 ranges but weigh factors slightly differently.

Related Guides

Your Legal Rights

Consumers are protected by several federal laws when dealing with credit reporting issues related to credit scores:

You may file complaints with the Consumer Financial Protection Bureau (CFPB) or the Federal Trade Commission (FTC).

Why Trust Credit1Solutions

Reviewed by Hemminger Law Firm, Consumer Rights Attorneys | Last reviewed: January 1, 2026