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
Range
Rating
Impact
800-850
Exceptional
Best rates, instant approval
740-799
Very Good
Low rates, easy approval
670-739
Good
Standard rates, most approvals
580-669
Fair
Higher rates, some denials
300-579
Poor
Limited options, high rates
The 5 FICO Scoring Factors
Payment History (35%): On-time payments are the single most important factor
Credit Utilization (30%): Keep balances below 30% of credit limits; below 10% is ideal
Length of Credit History (15%): Older accounts help your score
Credit Mix (10%): Having different types of credit (cards, loans, mortgage) helps
New Credit (10%): Too many new accounts or inquiries can lower your 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.
Consumers are protected by several federal laws when dealing with credit reporting issues related to credit scores:
Fair Credit Reporting Act (FCRA) — 15 U.S.C. §1681: Requires credit bureaus to maintain accurate information and investigate disputes within 30 days. Consumers can dispute inaccurate items directly with bureaus or furnishers.
Fair Debt Collection Practices Act (FDCPA) — 15 U.S.C. §1692: Prohibits abusive, deceptive, and unfair debt collection practices. Collectors must validate debts upon request.
Credit Repair Organizations Act (CROA) — 15 U.S.C. §1679: Regulates credit repair companies and protects consumers from deceptive practices.
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Reviewed by Hemminger Law Firm, Consumer Rights Attorneys | Last reviewed: January 1, 2026
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