Key takeaway: For many credit-scoring models, credit scores below 600 are generally considered “bad” or “poor,” which means you may still be approved for loans or credit cards, but you’ll likely face higher interest rates and less-favorable terms.

A credit score of 600 or lower is generally considered to be a “bad” or “poor” credit score, but the exact range for bad credit scores depends on the scoring model.

You have many credit scores, each one backed by a unique scoring model. While some credit scoring models share the same credit score ranges, some of them categorize those ranges differently. Your lender may also have its own criteria for what they consider to be a bad score, regardless of what your scoring model says. 

Credit Karma provides free VantageScore® 3.0 credit scores, plus free credit reports, from TransUnion and Equifax. If you’re not sure whether your VantageScore® 3.0 score is considered “bad,” you can log into Credit Karma and check.

If your credit scores are low, you’ll likely have trouble qualifying for the best loans and credit cards. If you do qualify, the terms and rates may not be favorable. Let’s break down what a bad credit score really means and how to improve your scores if they’re low.

• What is considered a bad credit score?
• What factors affect your credit scores?
• What happens if you have a bad credit score?
• How to improve a bad credit score
• Next steps: Check your credit reports
• FAQs about bad credit scores

What is considered a bad credit score?

Your credit scores can be different depending on the credit reports and scoring model used to calculate them. So, what does a bad credit score look like for each model? Let’s take a look at a few popular examples.

What is a bad FICO credit score?

FICO base credit scores have a range of 300 to 850, while industry-specific FICO scores have a range of 250 to 900. If you have a base score below 580, you’re in the lowest FICO credit score range — called “poor.” Having a credit score in the poor range is often what people mean when they say “bad” credit score. Industry-specific FICO ranges are categorized similarly, but they may vary based on the exact scoring model being used. 

Being in this range means that your FICO credit score is well below the average score for U.S. consumers, according to FICO. 

Here are all five base FICO score ranges:

• Poor: 300 to 579
• Fair: 580 to 669
• Good: 670 to 739
• Very good: 739 to 799
• Excellent: 800 to 850

See where you can check your FICO scores for free.

What is a bad VantageScore credit score?

Like FICO scores, VantageScore uses a range of 300 to 850. Below are the VantageScore® 3.0 and 4.0 ranges.

• Poor: 300 to 600
• Fair: 601 to 660
• Good: 661 to 780
• Excellent: 781 to 850

What is a bad score for a mortgage?

Lenders don’t generally say what scores they consider bad, but certain loans do have guidelines in place for minimum qualifying scores. Here are the minimum credit score guidelines for a few common mortgage loans:

Just because there are minimum score guidelines in place, however, doesn’t mean a lender will approve an application with that low of a credit score. Your lender likely has its own guidelines in place that could be higher. 

What is a bad score for an auto loan?

There is no minimum credit score for securing a car loan. Each auto lender sets its own minimum credit score requirements.

However, higher credit scores mean you’re more likely to be approved and receive favorable terms. Experian’s State of the Automotive Finance Market report for the third quarter of 2025  shows that nearly 94% of all auto loans for new cars went to borrowers with a VantageScore 4.0 credit score above 600:

What factors affect your credit scores?

Your FICO and VantageScore credit scores are affected by similar credit score factors. Here’s a breakdown of what they are:

• Payment history: This is the most important factor to your credit scores. It tracks whether you consistently pay your bills on time. 
• Credit utilization: This looks at how much credit you’re currently using on revolving accounts like credit cards compared to your overall available credit and is included in FICO’s “amounts owed” category. A high credit utilization could lead lenders to think you’re overextended and might not be able to afford more debt. 
• Length of credit history: This factor measures the average age of all of your accounts, as well as the ages of your newest and oldest accounts. For VantageScore models, this is part of the “depth of credit” category. 
• Credit mix: This shows the different types of credit accounts you have, such as credit cards and auto loans. You don’t need one of each to successfully build credit, but lenders typically like to see that you can manage different types of accounts. This is also part of VantageScore’s “depth of credit” category.
• New credit: This section tracks how many credit accounts you’ve recently applied for or opened by looking at the hard inquiries on your account. Opening too many accounts in a short timeframe can hurt your scores. 

What happens if you have a bad credit score?

Having bad credit scores doesn’t mean you’re a bad person, but it can make certain aspects of your financial life harder. Here are some examples:

• You may not have access to the loans and cards you want. Many of the best products on the market are only available to people with good to excellent credit.
• You may be offered unfavorable terms by lenders. If you are offered a loan or credit card, you likely won’t be offered the best terms available. You may have to pay additional fees, for example, or have a higher interest rate than someone with strong credit. 
• Your insurance premiums might be higher. Home and car insurance providers can use credit scores to determine how high your premiums should be. If you have bad credit, you might have to pay more for insurance. 
• You might have a difficult time getting approved for a rental property. Some landlords may check your credit scores and reports before agreeing to rent you a property. Lower credit scores can cause a landlord to deny you or charge you additional upfront costs. 
• You might be turned down by a potential employer. While employers can’t check credit scores, they can sometimes check modified versions of credit reports, depending on state laws. The same negative information on a credit report that contributes to low scores is typically visible to potential employers, and they could decide whether this information affects their hiring decision. 

How to improve a bad credit score

The good news is that it’s never too late to improve your credit scores. You can start by following these steps:

1. Pay your bills on time, every time. Payment history is the most important factor in credit scoring, so ensuring you make timely payments each month is key.
2. Keep your credit utilization low. Paying down your balances lowers your credit utilization ratio, which is better for your credit scores. Experts typically recommend keeping your credit utilization ratio below 30% each month. 
3. Avoid taking on new debt or opening new accounts. If you’re struggling to manage your current debt, adding new accounts to the mix could make it harder for you to focus on building credit. If you are trying to rebuild your credit after closing old accounts or dealing with an event like bankruptcy, consider starting with a secured credit card or credit-building account. 

Next steps: Check your credit reports

With so many ways that your credit reports and scores can influence your life, it’s important to keep close tabs on both and take quick action when you notice any mistakes.

Credit Karma provides free credit reports and VantageScore® 3.0 credit scores from TransUnion and Equifax, two of the three major credit bureaus. By regularly checking your credit reports, you can make sure there are no errors dragging down your scores. If you do find any errors, you can dispute them.

Credit Karma also offers credit monitoring services and can alert you to changes in your credit reports, such as new hard inquiries. By keeping an eye on your scores and reports as you rebuild your credit, you’ll be able to track your progress.

Want to know more about your exact credit scores? Learn what your score means: 300   320   340   360   380   400   420   440   460   480   500   520   540   560   580   600   620

Key takeaway: You can check your credit scores by using free services like Credit Karma and myFICO, as well as tools from banks, credit counselors and credit bureaus. You have many credit scores, and they can differ based on the credit scoring model, timing of the report or which credit bureaus your lender reports to.

To check your credit scores, you can use tools from consumer credit bureaus, banks, credit card issuers, credit score services and certified credit counselors.

These credit score tools typically provide access to certain credit scoring models, including FICO® Score 8 or VantageScore® 3.0. Many of these options are free, but not all. Some companies charge a fee for their services or will lock specific scoring models behind a paywall.

Credit Karma provides free VantageScore® 3.0 credit scores that you can check daily from TransUnion and Equifax. It also provides free credit monitoring that can alert you to changes on your credit reports.

• How do I check my credit scores?
• Which credit scores do lenders use?
• Why do I have different credit scores?
• What credit factors affect my credit scores?
• Next steps: Check your credit reports
• FAQs about checking credit scores

How do I check my credit scores?

Under the Fair Credit Reporting Act, U.S. consumers are entitled to receive one free credit report from each of the three major consumer credit bureaus every year. Thanks to a COVID-era program that has become permanent, however, the three main credit bureaus will provide you with a free copy of your credit reports weekly at annualcreditreport.com.

Keep in mind that those reports don’t include free credit scores. 

To get your scores, you must access them separately. Here are the main places where you can get your credit scores:

• Credit bureaus: You can get your scores from the three credit reporting agencies: Equifax, Experian and TransUnion, but you might be charged a fee for certain versions.
• Lenders: If you have a credit card or loan, your credit card company or lender may provide access to your credit scores on your monthly statement. Many banks and credit card companies also have credit score tools built into their apps or websites. Some credit card issuers allow you to check your scores even if you’re not a cardholder with them. For example, you can use the American Express® MyCredit Guide tool and CreditWise from Capital One for free.
• Credit score services: Many companies provide credit scores for free, but some charge a monthly fee. Some websites do a combination of both, providing certain scores for free but locking others behind fees. For example, myFICO provides your FICO® Score 8 for free but charges for scores from other FICO scoring models. Before you sign up, make sure to read the fine print.
• Certified counselors: If you’re working with a reputable credit counselor or HUD-approved housing counselor, they may offer you access to your credit scores.

Your credit scores help lenders assess your credit risk, so if you check them routinely, you’ll know where you may stand before applying for loans, credit cards or even housing.   

In some cases, you may need to provide personal information, such as your name, date of birth, address and Social Security number, to receive access to your scores. In other cases, the information may be readily available on your monthly loan or credit card statement or once you log into your online account.

How do I check my free credit scores with Credit Karma?

Credit Karma provides free VantageScore® 3.0 credit scores from two out of the three major credit bureaus, TransUnion and Equifax. You can check these scores daily by creating an account with Credit Karma. Once you’ve verified your identity, Credit Karma will use the information provided to retrieve your credit scores and credit reports. 

You can get your FICO scores for free using other services or tools. 

How do I check my business credit score?

Businesses have their own credit bureaus and credit scores separate from consumer ones. Dun & Bradstreet, Equifax Business and Experian Business are the major business credit bureaus, and they each have their own scoring models and credit factors.

Here’s an overview of how to check your business credit score with each of them:

• Dun & Bradstreet: Get a D-U-N-S Number for your business if you don’t have one already. Then, you can get a PAYDEX score through the company or through a provider like Nav.
• Equifax Business: Order your business credit report from the company and get access to your Credit Risk and Failure Risk scores.
• Experian Business: Order your business credit report from Experian, which will include your Experian Business credit scores.

Which credit scores do lenders use?

Companies use a variety of credit scores to make decisions, including whether to approve you for loan applications, insurance premiums (in certain states), rental requests and, in some states, employment applications. 

But they also may use their own proprietary models or consider other factors such as your income, employment history and debt-to-income ratio. 

Some common scoring models your lender may use include:

• FICO® Score 8, the most widely used version of FICO credit scores.
• FICO® Score 10, the first FICO suite with a version that tracks trended data (FICO® Score 10T). 
• FICO® Auto Score, an industry-specific score mainly used by auto lenders. 
• FICO® Bankcard Score, an industry-specific score mainly used by banks and credit card issuers.
• VantageScore® 3.0, a widely used credit scoring model created by the three credit bureaus.
• VantageScore® 4.0, another scoring model from VantageScore and the first score version to track trended data. The Federal Housing Finance Agency also began accepting VantageScore 4.0 for all mortgages sold to or guaranteed by Fannie Mae and Freddie Mac starting in late 2025.

Why do I have different credit scores?

You have multiple credit scores for several reasons. There are dozens of credit scoring models, and different models have different scoring criteria and formulas. 

Here are some other reasons your scores may be different:

• They use different credit reports: Not all lenders report to all credit bureaus, meaning your credit reports might not look exactly the same. Because your credit scores are generated using information from your credit reports, they can be different depending on what reports are used. 
• They use information reported on different dates: Your credit scores can change any time new information is reported, so your scores may be different depending on when they were pulled. Plus, lenders might not report to each credit bureau at the same time, so some credit reports may show information from older dates when you review your scores. 

What credit factors affect my credit scores?

Credit scores are calculated by weighing information taken from your credit reports. While every credit scoring model is calculated a little differently, they all generally look at the same five main credit factors:

• Payment history: Payment history is the single most important factor to your credit scores. It measures whether you consistently make on-time payments. 
• Credit utilization: This factor looks at the amount of credit you’re using compared to your total available credit. FICO considers this part of its “amounts owed” category. 
• Length of credit history: This factor measures the age of your oldest and newest accounts and the average age of all accounts. VantageScore includes this factor in its “depth of credit” category.
• Credit mix: This looks at the different types of credit accounts you have, such as credit cards, auto loans and personal loans. VantageScore includes this factor in its “depth of credit” category. 
• Recent credit activity: This includes any new credit applications you’ve submitted and any new credit accounts you’ve opened.  A flurry of recent credit applications may be an indicator of financial strain for some lenders. 

Here’s how FICO® Score 8 and VantageScore® 3.0, two widely used scoring models, weigh credit score factors:

Next steps: Check your credit reports

Because your credit scores are generated based on information included in your credit reports, it’s important to monitor your credit reports as well as your scores. 

You can start by getting free credit reports from TransUnion and Equifax through Credit Karma. By law, you’re also entitled to free credit reports from all three credit bureaus through the government-authorized website annualcreditreport.com. 

Review your reports carefully to ensure all the information is accurate. If you find information on your TransUnion or Equifax report that’s not correct, you can dispute the error to try and resolve the issue. 

If you want to raise your scores, take a look at these steps you can take to improve your credit.

While it’s not the newest FICO scoring model, FICO® Score 8 is still the most widely used. It’s generally consistent with newer versions but differs in several key ways.

A FICO® credit score is a three-digit number ranging from 300 to 850 (or 250 to 900 for industry-specific scores). There are multiple versions of FICO® credit scores, and each is based on a unique formula calculated from information on your credit reports.

VantageScore® is another set of popular scoring models that uses information in your credit reports to generate scores. Scores from FICO and VantageScore can help lenders assess how likely you are to repay debt. Credit Karma provides free VantageScore® 3.0 credit scores from two of the three credit bureaus: TransUnion and Equifax.

Though FICO® Score 9 debuted in 2014 and FICO® Score 10 debuted in 2020, many lenders still rely on FICO® Score 8 when making decisions. That’s why it’s important to know what goes into the FICO® Score 8 credit scoring model. Here’s a breakdown of the factors behind FICO® Score 8, as well as the differences between it and newer versions.

• What factors affect your FICO® 8 credit score?
• FICO® Score types: How FICO Score 8 differs from other models
• Do lenders use FICO® Score 8?
• Next steps: Check your credit scores
• FAQs about FICO® Score types

What factors affect your FICO® 8 credit score?

FICO credit scores depend on the information in your credit reports, so knowing what’s in those reports is a good place to start. Your credit reports contain information such as how often you make payments on time and how many credit accounts you have open.

This information directly affects your FICO® Score 8 credit scores, as well as scores using many other credit scoring models. For example, keeping your credit utilization low can help your FICO® Score 8 credit scores, while repeatedly neglecting to pay your credit card bills on time can hurt them.

Here’s a breakdown of the credit score factors that make up your FICO scores:

• Payment history (35%): Your history of paying credit accounts is a major factor in determining your FICO scores. Lenders want to know whether you’ve paid your bills on time.
• Amounts owed (30%): This factor refers to how much you owe on credit accounts, such as installment loans and credit cards, and the percentage of your available credit that you’re using (known as your credit utilization rate).
• Length of credit history (15%): FICO scores take into account how long you’ve had your oldest and your newest accounts. Also considered are the average age of all your accounts and how long it’s been since you’ve used certain accounts. Generally speaking, the longer your credit history the better.
• Credit mix (10%): FICO scores consider your mix of different credit accounts, though it’s not a key factor. These may include credit cards, mortgage loans and auto loans.
• New credit (10%): New credit applications and recently opened accounts can influence your FICO scores. That’s because they trigger a hard credit inquiry, which shows other lenders that you’re looking for credit and can temporarily lower your scores by a few points.

Comparing FICO® Score 8 and VantageScore 3.0 credit score factors

Here’s how FICO® 8 and VantageScore® 3.0 — another widely used model — weigh these credit score factors:

FICO score types: How FICO® Score 8 differs from other models

FICO® Score 8 is just one credit-scoring model.

On Credit Karma, for example, you can get your free VantageScore® 3.0 credit scores from TransUnion and Equifax. These scores may not match up exactly with credit scores based on the FICO® Score 8 credit scoring model, but they rely on many similar factors. For example, your credit card utilization rate is considered a high-impact factor in both the VantageScore® 3.0 and FICO® Score 8 credit scoring models.

But there are still differences to consider, such as how other models treat:

• Paid collections: Newer FICO scoring models and VantageScore® 3.0 and 4.0 models ignore all paid collections accounts. FICO® Score 8 does not unless the collection is for less than $100. This means that paying off a debt in collection won’t have as much of an immediate impact on your FICO Score 8 credit score as it would other scores.
• Medical collections: FICO® Score 9, FICO® Score 10 and VantageScore® 4.0 de-emphasize the impact of unpaid medical collections accounts.
• Rental payments: FICO® Score 9 factors rental payment history into your scores — provided your landlord reports it to at least one of the three consumer credit bureaus.
• Trended data: VantageScore® 4.0 and FICO® Score 10T look at historical trends for factors like credit utilization as part of their credit score formulas, while FICO® Score 8 only looks at your most recently reported credit utilization information.

Here are some other key similarities and differences among the most popular VantageScore® and FICO® score models.

Do lenders use FICO® Score 8?

FICO® Score 8 credit scores are the most widely used FICO scores, and many lenders use them to assess credit applications. 

In addition to deciding whether you’re approved for a financial product, lenders may use your FICO® Score 8 to help them determine your:

• Credit limit
• Interest rate
• Repayment period

While companies like FICO and VantageScore create the formulas, however, it’s the lenders who ultimately select which model and version to use. That’s also why a credit card issuer or auto lender might stick with whichever credit score version it’s already using even if new models have come out. And credit scores aren’t the only thing lenders use to determine whether you can borrow money. Lenders may also look at factors such as your debt-to-income ratio, employment history and income. They also may use their own proprietary scoring models.

Where to find your FICO scores

If you want to check your FICO® Score 8 for free, you’ve got several options:

• myFICO: You can sign up for a free plan under myFICO and get your FICO Score 8 credit score.
• Experian: This credit bureau can provide you with your FICO® Score 8 for free if you sign up.
• American Express MyCredit Guide: American Express will provide your FICO® Score 8 credit score even if you’re not a cardholder.
• CreditWise from Capital One: Just like with American Express, you can get your FICO® Score 8 credit score from Capital One even if you’re not a cardholder.

Next steps: Check your credit scores

If you’re shopping for a new loan or credit card, consider reaching out to your potential lender and asking which credit scoring model may be used to evaluate your credit.

The more you know about what goes on behind the scenes, the better you can try to position yourself in the eyes of a prospective lender.

Credit Karma can provide your free VantageScore® 3.0 credit scores, as well as free credit reports, from TransUnion and Equifax. By checking your scores and reports routinely, you can stay on top of your credit-building progress and know where you stand before you apply for new credit.

If you spot any errors on your credit reports, make sure to dispute them with the credit bureaus.

Key takeaway: Your FICO® Auto Scores are specific credit scores tailored to the auto loan industry, but they’re not the only credit scores auto lenders use.

FICO® Auto Scores are industry-specific FICO scores tailored to lenders that issue car loans. Unlike FICO base scores that range from 300 to 850, FICO® Auto Scores range from 250 to 900.

You have many different FICO® Auto Scores, each based off a FICO base credit scoring model, like FICO® Score 8 or FICO® Score 9. Although FICO® Auto Scores use the same data as FICO base scores, the auto scores consider specific risk factors that focus on predicting how likely someone is to make auto loan payments as agreed. 

Instead of FICO® Auto Scores, Credit Karma show free VantageScore 3.0 credit scores from TransUnion and Equifax.

Let’s break down what goes into your FICO® Auto Scores, how you can check them and what you can do to improve your credit scores overall.

• What is a good FICO® Auto Score?
• How to check your FICO® Auto Scores
• How can I check my credit scores for free?
• Next steps: How do I improve my credit?
• FAQs about FICO® Auto Scores

What is a good FICO® Auto Score?

Even though FICO® Auto Scores have a different scale than the general base scores, they tend to categorize scores similarly. So, a score that falls into the “good” category on a base FICO score range will likely fall into the good category on the FICO® Auto Score range. 

For example, here are the category ranges for FICO® Score 8, the most widely used FICO credit score:

• Poor: 300-579
• Fair: 580-669
• Good: 670-739
• Very good: 740-799
• Exceptional: 800-850

Your FICO® Auto Score 8 is calculated similarly to FICO® Score 8, so its category ranges look like this: 

• Poor: 250-579
• Fair: 580-669
• Good: 670-739
• Very good: 740-799
• Exceptional: 800-900

Just like you have more than one base FICO score, you also have many FICO® Auto Scores. What’s considered “good” for a specific credit scoring model will depend on how its calculated. 

Lenders also have their own criteria for what’s considered a good credit score, so even if you have a good credit score on paper, you may not qualify for the auto loan you want. 

Auto loans are considered secured loans because they typically use the car itself as collateral for the loan. So, you may have an easier time qualifying even if your credit scores aren’t considered good. Still, read the fine print carefully: Many buyers end up with high interest rates, hidden fees and monthly payments they can’t afford once the promotional period ends.

How to check your FICO® Auto Scores

While some credit scores can be monitored for free, your FICO® Auto Scores usually aren’t among them. You can typically purchase access to your FICO® Auto Scores if you: 

• Sign up for a subscription through myFICO. When you pay for an Advanced or Premier tier through myFICO, you can monitor a handful of your credit reports and scores, including your FICO® Auto Scores. 
• Sign up for a Premium membership through Experian. Paying for the Premium membership tier allows you to view additional FICO scores, including FICO® Auto Score 2 and 8. 

Before you sign up for credit monitoring or buy your auto score, remember that there are many different FICO® Auto Scores. Monitoring just one doesn’t guarantee you’ll see the same version your lender checks, if your lender even pulls your auto scores at all. Consider calling your lender’s financing department to see which version they use before paying for your scores.

How can I check my credit scores for free?

If you want to see other scores aside from your FICO® Auto Score, you can start by checking with your bank or credit card issuer. Many of them offer free access to certain scores, such as FICO® Score 8 or VantageScore® 3.0.

Credit Karma provides free VantageScore® 3.0 credit scores, along with free credit reports, from TransUnion and Equifax. 

Next steps: How do I improve my credit?

Here are some of the best ways to improve your credit, regardless of which credit score you’re looking at:

• Pay your bills on time, every time. Payment history is the most important factor to your FICO and VantageScore credit scores. By building a positive payment history, you’ll be able to improve your credit scores. 
• Use only a portion of your available credit. Credit utilization refers to the amount of credit you’re using compared to your overall available credit. So, if you have a credit card with a $1,000 credit limit and you use only $200 of that limit, your utilization rate is 20%. If this ratio is too high, lenders may think you’re overextended, which can hurt your scores. By keeping credit utilization low — ideally below 30% — you may see better credit scores. 
• Avoid unnecessary applications for new credit. Opening new credit accounts will typically come with hard credit inquiries, which will temporarily lower your score. 
• Look for errors in your credit reports. If your credit reports incorrectly show something negative, like an auto loan payment you made that was reported as missed, you can dispute the error.

If you’ve missed auto loan payments in the past, that information typically stays on your credit reports for seven years, although its impact lessens with time. If you have unpaid auto collections, paying them off now may help you improve your scores and appear more favorable to lenders.

Key takeaway: The three general types of credit accounts are revolving, installment and open-end accounts, and each one can affect your credit scores a little differently.

Credit accounts typically fall into three types: revolving, installment and open-end. While they can each affect credit score factors like credit mix and payment history, only revolving credit typically affects your credit utilization.

You have many credit scores, each of which is calculated using a credit scoring model that pulls information from your credit reports. Each credit scoring model calculates scores a little differently, but they all typically take the same general credit factors into consideration.

Revolving, installment and open-end credit accounts will affect those factors in different ways.

If you just opened a new account and want to check your credit scores, consider starting with your VantageScore 3.0 credit score, which you can get from Credit Karma for free. Credit Karma provides VantageScore 3.0 credit scores through TransUnion and Equifax, two of the three major credit bureaus.

If you want to know how revolving, installment and open-end credit accounts will affect your scores in the short and long term, take a look at our breakdown.

• What are the different types of credit?
• How does each type of credit affect credit scores?
• What’s next? Start simple and build from there.
• FAQs about types of credit

What are the different types of credit?

There are three main types of credit accounts: revolving, installment and open-end. Here are the basics of each:

Revolving credit

Revolving credit is a line of credit you can borrow from up to a set credit limit. As you repay what you borrow, you can generally use that credit again. Monthly payments are required, and interest may be charged based on the account terms. 

Examples of revolving credit accounts include:

• Credit cards
• Home equity lines of credit (HELOCs)
• Personal lines of credit

Installment credit

Installment credit refers to a loan for a set amount of money with fixed, regularly scheduled payments over a set repayment term. Each payment typically includes principal and interest based on the loan terms, and the balance should be paid off by the end of the term. 

This is another common type of credit and what most people mean when they talk about “loans” in general. The installment credit category includes a variety of loan types, such as:

• Personal loans
• Student loans
• Mortgages
• Auto loans

Open-end credit

Open-end credit, also called open credit, refers to accounts that allow repeated borrowing without a fixed end date. Some lenders distinguish open-end credit from revolving credit by using open-end to describe accounts that may need to be paid in full each billing cycle, such as certain charge cards. 

Common examples of open-end credit accounts can include:

• Utility accounts
• Cellphone plans
• Charge cards 

Service accounts, such as utility and cellphone accounts, don’t typically appear on your credit reports unless they become delinquent or are sent to collections.

How does each type of credit affect credit scores?

Credit scores are calculated by pulling information from your credit reports into unique credit scoring models. Here are the five main factors FICO and VantageScore credit scoring models typically consider, as well as how each type of credit can influence those factors:

Credit mix

This category is the one most influenced by your credit accounts because it directly measures the different types of credit accounts you have. Having a mix of credit types is generally good for your credit. 

But a mix isn’t needed to build credit successfully — and it doesn’t even account for a large percentage of your credit scores. For FICO scores, the credit mix category typically accounts for just 10% of your overall credit scores.

VantageScore models include “credit mix” in their “depth of credit” category, so while the exact percentage for credit mix on its own is unknown, it’s still small in comparison to VantageScore’s more important factors.

Because it’s such a small factor in building credit, you shouldn’t open a new credit account just to improve your credit mix.

Payment history

Payment history is the single most important factor in your credit scores, reflecting whether you pay accounts on time.

Most traditional credit accounts — including revolving lines like credit cards and installment loans like auto or student loans — are reported to the credit bureaus monthly. 

To protect your scores, the most crucial habit you can build is paying these bills on time, every time.

However, the impact of payment history can vary depending on the account type:

• Revolving and installment: These are almost always reported to the bureaus. Positive payments help build your score, while late payments can significantly damage it.
• Open-end and service accounts: Aside from charge cards, many open-end accounts (like utilities or cellphones) typically do not appear on your credit report as long as they are in good standing. This means that while paying your electricity bill on time won’t necessarily help your score, missing enough payments for the account to be sent to collections can cause your score to drop.

Credit utilization

Credit utilization refers to the amount of credit you’re using compared to your overall available credit limits. This factor typically measures your credit card balances against your credit card limits, though other revolving lines — like a HELOC — can also play a role.

FICO models include credit utilization in their “amounts owed” category.

If you don’t have a HELOC or another revolving line of credit, you can usually calculate your utilization ratio by looking at your credit cards.

To avoid hurting your scores, many experts recommend keeping your utilization ratio below 30%.

Length of credit history

Length of credit history measures the age of your oldest and newest accounts, as well as the average age of all of your credit accounts combined. If you’re tracking your VantageScore, you’ll see this grouped under their “depth of credit” category. 

Open-end credit accounts, with the exception of charge cards, don’t typically affect length of credit history because they’re not usually added to your credit reports.

In general, the longer your credit history, the better, meaning the best way to influence this factor is to keep your accounts open and in good standing.

Recent credit

Recent credit, also called “new credit” in the case of FICO scores, refers to accounts you’ve recently applied for or opened. It tracks the number of hard inquiries you’ve gotten from potential lenders.

This category is typically influenced by newly opened credit accounts and hard inquiries tied to applications for credit. Utility or service companies may sometimes check your credit as part of the approval process, but those checks are often soft inquiries, which don’t affect your credit scores.

What’s next? Start simple and build from there

Having a mix of credit can help your credit scores, but only if each account is managed carefully. Staying on top of your payments, regardless of credit type, can help show lenders that you can handle various types of credit. But, if you don’t need to open a new type of credit account, it’s probably not worth the bump in scores.

If you’re at the beginning of your credit-building journey, consider focusing on one type of credit. Revolving credit, such as a credit card, can be a good place to start.

For example, you could open a secured card and start using it for small purchases that already fit your budget. Once you’re comfortable making on-time payments — and ideally paying the balance in full each month — you can look into other credit products.

As you build credit, it can also help to monitor your reports and scores regularly. Credit Karma provides free VantageScore 3.0 credit scores, along with free credit reports from TransUnion and Equifax.

By signing up with Credit Karma, you can get in the habit of checking your credit reports and scores as you build credit.

Key takeaway: You have dozens of credit scores, but they all are created based on information your credit reports. Most take the same general scoring factors into consideration.

You have dozens of credit scores, each backed by a specific credit scoring model and generated using the information in specific credit reports.

The most common credit scoring models are from FICO and VantageScore. Credit Karma provides free VantageScore® 3.0 credit scores from TransUnion and Equifax, two of the three major credit bureaus. You can use Experian, the other major credit bureau, to view your FICO® Score 8 for free.

Although you have plenty of credit scores, they’re usually influenced by the same information. The differences between them come down to how each credit scoring model weighs certain factors and what credit report it’s pulling from.

Here’s a look at how your credit scores are calculated and why you have so many, as well as what you can do to make sure your scores are in solid shape.

• How are credit scores calculated?
• Why are my credit scores different?
• What factors affect your credit scores?
• What’s next? Deciding which credit score is most important
• FAQs about credit scores

How are credit scores calculated?

Your credit scores are calculated using information from your credit reports, which you can get from the three major credit bureaus: Equifax, Experian and TransUnion.

Companies like FICO and VantageScore generate three-digit scores that indicate your credit risk by running the information in your credit reports through a proprietary mathematical formula.

These credit scores can update frequently, even as often as every day depending on when new information is reported and pulled from your reports.

Lenders will use the information in your credit reports and your credit score to help determine if they’ll approve you for a credit card or loan. But keep in mind that they may also consider other factors such as income, employment history and debt-to-income ratio.

Why are my credit scores different?

You have many different credit scores because there are dozens of credit scoring models. Each provides a slightly different picture of your financial health.

There are a few main reasons your credit scores may differ from each other:

• Credit scores are backed by different credit scoring models. A scoring model generates a credit score by weighing certain credit factors in its calculations. One scoring model may weigh late payments more heavily, while another may ignore medical debt in collections, for example. These differences cause your scores to be different depending on which model is used.
• Not all lenders report to every credit bureau. Because your credit scores are generated using only information in your credit reports, they can differ if those credit reports don’t all have the same information. Your lender isn’t obligated to report to all three credit bureaus, so it may report to only one or two — or none at all. Reach out to your lender if you want to know which bureaus they report to.
• Your lenders may report to each bureau at different times. Even if your lender reports to all three major credit bureaus, it may not report at the same times. For instance, your credit card balances may be different depending on when the information was reported to different bureaus.

What factors affect your credit scores?

Your credit scores are typically influenced by the same credit factors. Here’s a breakdown of the main five factors that go into your FICO and VantageScore credit scores:

1. Payment history: This tracks whether you pay your bills on time and is the most important factor of both your FICO and VantageScore credit scores. That’s why building a positive payment history is a crucial part of your credit.
2. Credit utilization: The amount of credit you use compared to your overall available credit limit is your credit utilization. FICO tracks this as part of its “amounts owed” category. A high credit utilization ratio could indicate to lenders that you’re overextended, which can be harmful for your scores. That’s why experts recommend keeping your credit utilization low — under 30%, if possible.
3. Length of credit history: This refers to the age of your oldest and newest account, as well as the average age of all your accounts. In general, the longer your credit history, the better it is for your scores. VantageScore tracks this as part of its “depth of credit history” category.
4. Credit mix: Having a mix of credit means you have different types of credit accounts, such as a credit card and personal loan. You don’t need to have a credit mix to successfully build credit, but some lenders like to see that you can handle different types of accounts. VantageScore also tracks this as part of its “depth of credit” category.
5. Recent credit: Recent credit, also called “new credit” by FICO, shows the number of accounts you’ve opened or applied for. Opening too many accounts in a short time period could be a red flag to lenders.

What’s next? Deciding which credit score is most important

There is no single credit score that’s the most important — it all depends on why you need the score. If you want to view your scores for routine monitoring, consider focusing on your FICO® Score 8 and your VantageScore® 3.0 because many banks, credit card issuers and third-party services show you one of these for free. 

Credit Karma provides free VantageScore® 3.0 credit scores, as well as free credit reports, from TransUnion and Equifax. You can use Credit Karma to track your score as you build your credit. 

If you want to know your scores because you’re applying for a loan or credit card, try to determine which credit scores your potential lender uses during the credit approval process. FICO has dozens of scoring models in circulation, and VantageScore has six, so there are plenty of models for lenders to choose from. 

For example, a lender may choose your VantageScore® 4.0 credit score for a mortgage, but for an auto loan, your lender may use a version of the FICO® Auto Score. 

If you don’t know which score your lender uses, you can use the FICO® Score 8 and VantageScore® 3.0 scores for general guidance. If those scores are improving, odds are that your other scores are improving, as well.