FICO credit scores range from 300 to 850, with most lenders considering a score of 800 or higher to be excellent.
The most important factor in determining your credit score is your payment history. Certain monthly payments — such as those for your mortgage; auto, student or personal loans; and your credit card payments — are reported to the three national credit bureaus of TransUnion, Experian and Equifax. If you make these payments on time, your credit score will steadily rise. But if you make even one of these payments 30 days or longer past your due date, your FICO score could fall by 100 points or more.
Your FICO score also varies depending on how much of your available credit you are using, the age of your credit accounts and the number of new credit accounts you open.
To build a strong credit score, you must make your monthly payments on time, pay off your credit card debt and keep old credit card accounts open, even if you don't plan on using them again.
What's not included in your credit score?
But what doesn't impact your credit score? Quite a bit, including some financial factors that might surprise you.
Your income doesn't matter. Earning more money will not improve your credit score. Your credit score won't budge depending on your employment status. Losing your job won't ding your three-digit score.
Your age has no impact on your credit score, either, and your score won't rise or fall as you get older.
And certain payments don't impact your score. That's because many of your regular payments aren't reported to the credit bureaus. Even if you pay your utility bill, cable bill or cellphone bill on time each month, your credit score won't get a boost. These payments aren't tracked by Experian, Equifax or TransUnion.
Also, medical bills don't hurt or help your credit score. If you pay your doctor’s bill on time, your score won't rise. If you pay for it late, it won't fall. Be careful, though: If you don't pay your medical bills and your health care provider sends your account to collection, that will hurt your credit score.
If you rent an apartment or house, paying your landlord on time doesn't help your credit score in most cases. This is slowly starting to change as advocates for renters argue that paying rent on time each month should boost a credit score.
The credit bureaus are now accepting reports of on-time rent payments from landlords who submit them. And if your landlord does submit a record of your payments, it could help your credit score. The problem? Most landlords don't participate in these rent-reporting programs, so most renters still don't benefit from their on-time payments.
The key to a good credit score? Paying your bills on time
The most crucial step to building a good credit score remains simple: Pay your bills on time each month and keep your credit card debt low. If you do these two things, your score will steadily improve or remain high, no matter what else is or isn't included in your FICO score.