Credit scores determine access and pricing for borrowing, and the inputs are published in general terms even where the exact formulas are not.
The main factors
Payment history, amounts owed, length of history, new credit and credit mix.
Which are weighted differently, with payment history and utilisation dominating.
The general weightings are published by the scoring companies.
Utilisation
Balances relative to available credit.
Which is calculated at the point the lender reports, not at the payment due date.
Paying in full monthly can still show high utilisation if the statement balance is high.
What is not included
Income, savings, employment and demographic characteristics.
Which surprises people who assume the score reflects financial health generally.
A high earner with no credit history scores poorly.
Multiple scores
Different models produce different numbers from the same file.
Which is why the score you see may differ from the one a lender uses.
Version differences within the same model family also produce variation.
Hard and soft enquiries
Applications produce hard enquiries that affect scores; checking your own does not.
Which is a persistent misconception.
Rate shopping within a defined window is generally treated as a single enquiry.
Closing accounts
Reduces available credit and can shorten average history.
Which frequently lowers a score.
Keeping old accounts open with no balance is generally beneficial.
Errors
Credit files contain errors at meaningful rates according to regulatory studies.
Which can be disputed free of charge.
Checking all files before any major application is worthwhile.
Getting your report
Free access to reports is a statutory right, and the official route costs nothing.
Authorised users
Being added to another person's account can affect a score.
Which is used deliberately to build history.
Scoring models treat these accounts with varying weight.
Credit builder products
Secured cards and loans designed to establish history.
Which report to bureaus like any other account.
Fees and terms vary considerably and are worth comparing.
Derogatory marks
Late payments, collections, judgements and bankruptcies.
Which remain on files for defined periods set by statute.
Their effect diminishes over time even before they drop off.
Medical debt treatment
Rules on reporting medical collections have changed in recent years.
Which removed certain categories from credit files.
The changes were made by the bureaus and by regulation.
Practical steps
Pay on time, keep utilisation low, check reports annually and dispute errors.
Score ranges and thresholds
Lenders set cut-offs for approval and pricing.
Which produce large differences in cost either side of a threshold.
Moving above a threshold can be worth substantially more than the score change suggests.
Timing before an application
Paying down balances before the statement date lowers reported utilisation.
Which affects the score used for a subsequent application.
Reporting dates vary by lender and can be established by asking.
Freezes and locks
Restricting access to your file to prevent fraudulent applications.
Which is free by statute at the major bureaus.
Freezing and temporarily lifting is straightforward and is a genuine protection.
The summary
Pay on time, keep utilisation low, keep old accounts open, apply sparingly and check your files.
What the score is used for
Lending decisions, pricing, and in some jurisdictions insurance pricing, tenancy and utility deposits.
Which extends its influence well beyond borrowing.
Permitted uses are constrained by law and vary by state.
Building history from nothing
Secured cards, credit builder loans and authorised user status.
Which all report and establish a file over months rather than weeks.
There is no fast route, and anyone offering one is selling something.
Free monitoring
Many card issuers and banks provide free score access.
Which is generally an educational score rather than the one a lender uses.
It is still useful for tracking direction over time.
Paid services
Subscription monitoring and score access.
Which duplicate what is available free in most cases.
Statutory free report access covers the information that actually matters.
Rebuilding after difficulty
Time, consistent payments and low utilisation.
Which is the only reliable route, and it works.
Credit repair firms cannot remove accurate information, whatever they claim.
The summary
A prediction of repayment likelihood from a defined set of inputs, not a measure of financial health.
Disputes in practice
Filing directly with the bureau and with the furnisher.
Which are separate routes and both are available.
Investigation timescales are set by statute.
Fraud alerts
Requiring additional verification on new applications.
Which is free and lasts for defined periods.
Extended alerts are available to identity theft victims.
The summary
A prediction from payment history, utilisation, age, mix and enquiries, checkable free, and improvable only with time and consistency.
A closing note
The score predicts repayment likelihood from a specific set of inputs and says nothing about income, savings or financial health.
Improving it takes time and consistency, and anyone promising otherwise is selling something that cannot work.
Where to look
Statutory free credit reports from each major bureau, and the dispute processes attached to them.