What is a credit score, and what actually moves it?

A FICO score is a number between 300 and 850 that summarises what your credit report says about how you have handled borrowed money. It is not a measure of your income, your savings or your character, and nobody at a bank sits down and decides it. It is calculated from your report, and it changes when your report changes.

FICO publishes the weight of the five categories that go into it. Knowing those weights is the difference between guessing and working.

The five categories

• Payment history — 35%. Whether you have paid past accounts on time. This is the single largest piece, and it is the one that late payments, collections, charge-offs and public records land in.
• Amounts owed — 30%. How much of your available credit you are using. A card at its limit reads very differently from the same balance spread across three cards.
• Length of credit history — 15%. How long your accounts have been open, and how long since you used them.
• New credit — 10%. How many accounts you have opened recently, and how many hard enquiries are on the file.
• Credit mix — 10%. Whether you have handled more than one kind of credit, such as a card and an instalment loan.

What this means in practice

Two categories account for nearly two thirds of the score, and they are the two that respond fastest. Paying on time this month cannot undo a late payment from two years ago, but it stops the bleeding. Bringing a balance down changes your utilisation on the next reporting cycle, which is usually weeks rather than years.

The other three move slowly, and two of them move against you when you act. Opening a new card to improve your mix adds a hard enquiry and shortens your average account age, and it does both immediately. If you are within a few months of a mortgage application, that trade is rarely worth it.

What a score does not tell you

It does not tell you whether the information behind it is correct. That is a separate question, and it is the one we start with: we read all three of your reports with you and identify what is inaccurate, erroneous, false or obsolete. You choose which of those items to dispute.

What cannot be done — by us or by anyone — is remove accurate, current and verifiable information. Anybody who offers you that is describing something the law does not allow.