Credit Scores Explained: What Moves Your Score and How to Raise It
The five factors behind your credit score, how much each one matters, and a 90-day plan to improve it.
Key takeaways
- Payment history and credit utilisation drive most of your score.
- Keep card balances below 30% of limits — under 10% is better.
- Checking your own score is a soft inquiry and never hurts it.
- Old accounts help; think twice before closing your oldest card.
What a credit score is
A credit score is a three-digit summary of how reliably you have handled borrowed money. Lenders use it to decide whether to approve you and at what interest rate. In the US the common models (FICO and VantageScore) range from 300 to 850; in Canada scores run 300–900; in India, CIBIL and other bureaus use 300–900. The scales differ, but the underlying behaviours they reward are almost identical.
The five factors, ranked
- Payment history (~35%) — on-time payments on loans and cards. A single 30-day late payment can drop a good score sharply and remain on file for years.
- Credit utilisation (~30%) — the share of your revolving limits you are using. A ₹1,00,000 or $10,000 total limit with a $3,000 balance is 30% utilisation.
- Length of history (~15%) — the age of your oldest account and the average age of all accounts.
- Credit mix (~10%) — a blend of revolving (cards) and instalment (car, home, personal) credit.
- New credit (~10%) — recent hard inquiries and newly opened accounts.
The percentages are the published FICO weightings and are approximate; other models weight factors slightly differently, but the order of importance is consistent.
A 90-day improvement plan
Days 1–7: Get the facts
Pull your reports from each bureau through the official free channels in your country. Dispute any account you don't recognise, wrong balances, or late payments you can document as on time. Errors are common and fixing them is the fastest win.
Days 8–30: Cut utilisation
Pay card balances down before the statement date — that is the balance most issuers report. If you can't pay down quickly, ask for a credit-limit increase on a card in good standing (ask whether it triggers a hard inquiry first).
Days 31–90: Lock in perfect payments
Set every account to autopay at least the minimum. Then pay extra manually. Avoid opening new accounts unless necessary; each application can cost a few points temporarily.
Myths that cost people points
- "Checking my score lowers it." False — self-checks are soft inquiries.
- "Carrying a small balance helps." False — paying in full builds the same history with zero interest.
- "Closing cards improves my score." Usually false — it reduces total limit, raising utilisation, and can shorten history.
- "Income affects my score." False — income isn't part of the score, though lenders consider it separately.
Watch: the 5-minute version
FAQ
How long does it take to improve a credit score?
Utilisation changes can show within one or two billing cycles. Recovering from late payments takes longer — typically 12–24 months of clean history to rebuild meaningfully.
What is a good credit score?
On the 300–850 scale, 670+ is generally 'good' and 740+ earns the best rates. On 300–900 scales (Canada, India), 750+ is widely considered strong.
Do debit cards build credit?
No. Debit transactions aren't reported to credit bureaus. A secured credit card is the usual starting point for building history.
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This guide is general education, not personal financial, tax or legal advice. Rules, rates and limits vary by country and change over time — confirm with official sources or a licensed professional.