When my credit score was 530, I didn’t really understand what that number meant. I knew it was bad. I knew it meant I couldn’t get approved for things. But I didn’t understand what went into it, how it was calculated, or what I could actually do to change it.
Most “credit score explained” articles are written like textbook chapters. This isn’t that. This is what I learned after spending a year rebuilding from 530, written for people who need to understand the system because they’re currently losing to it.
What Is a Credit Score?
A credit score is a three-digit number — typically between 300 and 850 — that represents how likely you are to repay debt. Lenders use it to decide whether to approve you, and at what interest rate.
Higher score = less risk to the lender = better terms for you.
Lower score = more risk = higher rates, bigger deposits, more denials.
That’s it. It’s a risk assessment tool. It’s not a measure of your worth, your intelligence, or your character. It’s a guess about whether you’ll pay your bills, based on whether you’ve paid your bills in the past.
But that guess controls a lot of your life: what apartments you can rent, what interest rates you pay, whether you can get a phone plan without a deposit, and in some states, even what you pay for car insurance.
Credit Score Ranges
The most common scoring model is FICO. Here’s what the ranges mean in practical terms:
| Score Range | Rating | What It Actually Means |
|---|---|---|
| 800-850 | Exceptional | Best rates on everything. Lenders compete for you. |
| 740-799 | Very Good | Approved for most things with favorable terms. |
| 670-739 | Good | Most lenders will work with you. Rates are decent, not the best. |
| 580-669 | Fair | Options are limited. Higher interest rates. Some cards and loans still available. |
| 300-579 | Poor | Most applications denied. Secured cards and high-interest options only. This is where I was. |
The average American credit score hovers around 715. If you’re below 670, you’re paying more for everything. If you’re below 580, you’re fighting for basic access. I was at 530 — deep in “poor” territory — and it affected every financial decision I tried to make.
The 5 Factors That Determine Your Score
Your credit score is calculated from the information in your credit reports. Five factors go into the calculation, and they’re not weighted equally. Understanding what matters most tells you where to focus your energy.
1. Payment History — 35% of Your Score
This is the biggest factor by far. Do you pay your bills on time? That’s more than a third of your entire score.
One late payment can drop your score significantly — and it stays on your report for 7 years. The more recent the late payment, the more it hurts. A late payment from last month damages your score much more than one from three years ago.
What counts: credit card payments, loan payments, mortgage payments. What usually doesn’t count (unless it goes to collections): rent, utilities, phone bills. Though some newer scoring models are starting to include these.
What I learned: After my divorce, I had multiple late payments from the chaos of splitting finances. Those were the single biggest anchor on my score. I couldn’t erase them, but I buried them under months of on-time payments with a secured credit card. Every clean month pushed those late payments further into the past.
The fix: Set up autopay on everything. Not because you’re irresponsible — because life gets chaotic and autopay doesn’t forget. This is the single most important thing you can do for your score.
2. Credit Utilization — 30% of Your Score
How much of your available credit are you using? This is the second biggest factor, and it’s the one that can change the fastest.
If you have a credit card with a $1,000 limit and a $900 balance, your utilization is 90%. That’s terrible. The scoring models see that and think, “This person is maxed out and probably in trouble.”
The general rule: keep utilization under 30%. Under 10% is even better. This applies to each individual card and to your total credit across all cards.
Here’s the good news: utilization has no memory. Unlike late payments that haunt you for years, utilization only reflects your current balances. If your cards are maxed out today and you pay them down to 20% next month, your score improves next month. It’s one of the fastest levers you can pull.
What I learned: When I got my secured card with a $200 limit, I made sure to never charge more than $60 on it — keeping utilization around 30%. When the limit increased to $500, the same $60 charge dropped my utilization to 12%. The limit increase boosted my score without me changing my spending at all.
3. Length of Credit History — 15% of Your Score
How long have you had credit accounts? Longer is better. The scoring models look at the age of your oldest account, the age of your newest account, and the average age across all accounts.
This is why financial advisors tell you not to close old credit cards — even ones you don’t use. That old card with a 10-year history is helping your average account age. Close it and your average drops.
This factor is frustrating because there’s no shortcut. You can’t fake account age. You just have to keep accounts open and let time pass.
What I learned: Starting over after divorce meant some of my oldest joint accounts were closed. My credit history got younger overnight, which didn’t help. The secured card I opened became my “new oldest account,” and every month it ages, this factor improves a little.
4. Credit Mix — 10% of Your Score
Do you have different types of credit? The scoring models like to see a mix — credit cards (revolving credit), a car loan (installment credit), a mortgage, a student loan. Having only one type of credit is seen as less proven than managing multiple types responsibly.
This factor is worth 10%. It matters, but not enough to take on debt you don’t need just to diversify your “credit mix.” Don’t get a car loan to improve this factor. It’ll improve naturally as you use different types of credit over time.
5. New Credit Inquiries — 10% of Your Score
Have you applied for a bunch of credit recently? Every time you apply for a credit card, loan, or other credit product, the lender does a “hard inquiry” on your credit report. Each hard inquiry drops your score by a few points.
One inquiry isn’t a big deal. Five inquiries in a month signals desperation to the scoring models — it looks like you’re scrambling for credit, which is a red flag.
Hard inquiries stay on your report for 2 years but only significantly impact your score for about 12 months.
What I learned: After getting denied for a credit card, my instinct was to apply for three more. I’m glad I didn’t. Each one would have been another hard inquiry dropping a score I couldn’t afford to lose points on. I applied for one secured card and left it alone.
Note: Checking your own credit score is a “soft inquiry” and does NOT affect your score. Check it as often as you want.
FICO vs. VantageScore
You’ll see two names when it comes to credit scores: FICO and VantageScore. Both use the 300-850 range. Both look at the same credit report data. But they weight things slightly differently, which is why your score can vary depending on which model is used.
- FICO — Used by about 90% of lenders for lending decisions. When a bank decides whether to approve your mortgage or credit card, they’re almost certainly using a FICO score. There are also multiple versions of FICO (FICO 8, FICO 9, FICO 10), which is why your score can be different depending on which version the lender uses.
- VantageScore — Created by the three credit bureaus (Equifax, Experian, TransUnion). More commonly used by free credit score tools and monitoring services. If you see your score on a banking app or Credit Karma, it’s often a VantageScore.
Don’t stress about the difference. The same behaviors that improve one score improve the other. Pay on time, keep utilization low, don’t apply for everything at once. The model doesn’t change the strategy.
The Three Credit Bureaus
Your credit history is tracked by three separate bureaus:
- Equifax
- Experian
- TransUnion
Each bureau maintains its own version of your credit report. They usually have the same information, but not always — some creditors only report to one or two bureaus, and errors might appear on one report but not the others. That’s why you should check all three.
You’re entitled to free credit reports from all three bureaus through AnnualCreditReport.com. This is the only official source. Anything else claiming to be “free” is probably trying to sign you up for a paid service.
What Doesn’t Affect Your Credit Score
People worry about things that don’t actually matter:
- Your income — A high salary doesn’t mean a high score. I’ve met people making six figures with terrible credit, and people making $30k with excellent credit. The score doesn’t know what you earn.
- Your savings or checking account balances — Banks don’t report your account balances to credit bureaus. Having $50,000 in savings doesn’t help your credit score. Having $12 in checking doesn’t hurt it.
- Your age, race, gender, or marital status — Legally, these cannot be factors in credit scoring.
- Checking your own credit — Soft inquiries don’t affect your score. Check it monthly.
- Debit card usage — Debit cards don’t report to credit bureaus. Using one doesn’t build credit.
- Rent payments — Usually not reported unless you use a service that specifically reports rent to bureaus. This is slowly changing, but for most people, paying rent on time doesn’t help your score.
How to Check Your Score
Free options:
- AnnualCreditReport.com — Free credit reports from all three bureaus (reports, not scores, but some now include scores)
- Your bank or credit card issuer — Many now show your FICO or VantageScore for free in their app or online banking
- Credit Karma — Free VantageScore from TransUnion and Equifax (ad-supported, they’ll try to sell you financial products)
You don’t need to pay for credit monitoring. The free tools are enough for most people. Check your score once a month to track the trend, and pull your full reports at least once a year to look for errors.
The Short Version
If you remember nothing else from this article, remember this:
- Pay on time. This is 35% of your score. Set up autopay.
- Keep balances low. This is 30% of your score. Under 30% utilization, ideally under 10%.
- Don’t apply for everything. Each application costs a few points. Be strategic.
- Keep old accounts open. Account age helps. Don’t close cards you’re not using.
- Check your reports for errors. Errors are common and fixable. AnnualCreditReport.com, once a year minimum.
That’s 65% of your score covered by just the first two items. Pay on time and keep balances low. Everything else is secondary.
I went from 530 to rebuilding my financial life by understanding these five factors and focusing on the ones I could control. You can’t change the past — the late payments, the collections, the damage — but you can start building a different pattern today. The score will follow.
If you’re starting from the bottom like I did, here’s where to go next: how I rebuilt my credit, the secured card that started it, and what to do if you’ve been denied.
— Thomas