Credit Score

A credit score condenses your credit reports into a number, most commonly the FICO score, which runs 300 to 850. Five factors produce it: payment history at 35% of the weight, amounts owed and utilization at 30%, length of credit history at 15%, new credit at 10%, and credit mix at 10%. The score is computed from the reports at the three bureaus, Equifax, Experian, and TransUnion, and lenders buy the score at the moment of application.

The score is a pricing input, not a verdict. Mortgage pricing tiers run in 20-point bands: a 760 score qualifies for the best pricing, and a 660 score pays meaningfully more for the same loan. A single 30-day late payment can drop a strong score by 60 to 110 points depending on where it started, which is how one missed payment becomes a more expensive mortgage for years.

The five weights are the machine. Payment history, 35%, records every on-time and late payment across all accounts. Amounts owed, 30%, is dominated by credit utilization: revolving balances divided by limits, computed at each statement close. Length of history, 15%, averages the age of every account; new credit, 10%, counts recent applications; and mix, 10%, rewards experience across card, installment, and mortgage types. The weights are FICO's published design, and the score is recomputed fresh at every application.

The late payment is the sharp edge. A payment 30 days past due is reported to the bureaus and can drop a 780 score by 90 to 110 points, per FICO's own damage estimates, while the same late on a 600 score costs less because there is less altitude to fall from. The mark stays for seven years, with the impact fading as it ages, and the recovery is boring: on-time payments, every month, for the life of the mark.

The mortgage tiers are the price list. Lenders price conventional loans in 20-point bands, and the gap between the 760 tier and the 660 tier is worth roughly half a percentage point on the rate: on a $400,000 loan, about $130 a month and $47,000 over 30 years. The same loan, the same house, priced by a score the borrower can move.

The credit score is the most expensive three-digit number most Americans own. It prices the mortgage, the car loan, the card, and often the apartment lease. The two levers that move it fastest are the ones borrowers control directly, payment history and utilization. The levers that damage it, a missed payment and a maxed card, are the same two levers in reverse.

I watched a colleague named Brent (yes, that Brent) miss a single 30-day payment on a card he had stopped opening, watch his 780 score fall to 670, and then shop for a mortgage at the worst pricing tier in a decade. The missed payment was $40; the mortgage priced at roughly $130 more a month for the life of the loan. The score was the invoice.

The highest-leverage thing most Americans can do is automate every minimum payment, keep utilization low at statement close, and leave old accounts open. Check where you stand with the credit assessment calculator and the payoff math in the credit card payoff calculator, and read the utilization lever in detail in the credit utilization entry.