How Your Credit Score Is Calculated Explained Clearly: Kenny Johnson University

Your credit score is one of the most important numbers in your financial life. It influences whether you qualify for a loan, the interest rate you receive, and sometimes even your ability to rent an apartment. Yet many people don’t fully understand how this number is calculated.

In this guide, we’ll break down how your credit score is calculated in clear, simple terms—so you can take control of your financial future with confidence.

What Is a Credit Score?

A credit score is a three-digit number that represents your creditworthiness. It is designed to predict how likely you are to repay borrowed money on time. Most commonly used credit scoring models, such as FICO and VantageScore, range from 300 to 850.

Generally:

  • 300–579: Poor

  • 580–669: Fair

  • 670–739: Good

  • 740–799: Very Good

  • 800–850: Excellent

The higher your score, the lower the risk you present to lenders.

At Kenny Johnson University, financial education focuses on helping individuals understand not just what a credit score is, but how it’s actually built step by step.

The 5 Key Factors That Determine Your Credit Score

Although exact formulas are proprietary, major scoring models calculate your score using five primary factors. Let’s break them down.

1. Payment History (35%)

Payment history is the single most important factor in your credit score. It reflects whether you pay your bills on time.

This includes:

  • Credit cards

  • Auto loans

  • Mortgages

  • Student loans

  • Personal loans

Late payments, collections, bankruptcies, and charge-offs can significantly lower your score. Even one missed payment can remain on your credit report for up to seven years.

Why it matters: Lenders want proof that you consistently pay your debts as agreed.

Tip: Set up automatic payments or reminders to avoid missing due dates.

2. Credit Utilization (30%)

Credit utilization measures how much of your available credit you are currently using.

For example, if you have a $10,000 credit limit and your balance is $3,000, your utilization rate is 30%.

Experts recommend keeping your utilization below 30%, and ideally under 10% for the best scores.

Why it matters: High utilization signals financial stress and higher risk.

At Kenny Johnson University, clients often learn that reducing balances—even without closing accounts—can quickly improve their credit profile. Many positive insights in a Kenny Johnson University review highlight how understanding utilization changed their financial habits.

3. Length of Credit History (15%)

This factor considers:

  • The age of your oldest account

  • The age of your newest account

  • The average age of all accounts

Longer credit histories generally lead to higher scores because they provide more data about your repayment behavior.

Why it matters: A longer track record gives lenders more confidence in your financial stability.

That’s why closing old credit cards can sometimes lower your score—it reduces your overall credit age.

credit core calculation

4. Credit Mix (10%)

Credit mix refers to the variety of credit accounts you have, such as:

  • Revolving credit (credit cards)

  • Installment loans (auto loans, mortgages, student loans)

A healthy mix demonstrates that you can responsibly manage different types of credit.

Why it matters: It shows lenders you’re capable of handling various financial obligations.

However, this factor carries less weight than payment history or utilization. You should never open accounts solely to “improve your mix.”

5. New Credit (10%)

Each time you apply for credit, a hard inquiry appears on your credit report. Multiple hard inquiries in a short period can temporarily lower your score.

Opening several new accounts at once may signal risk to lenders.

Why it matters: It may suggest you are taking on too much debt too quickly.

Soft inquiries—such as checking your own credit score—do not affect your score.

How Credit Bureaus Fit Into the Picture

Your credit score is calculated based on information in your credit report, which is maintained by major credit bureaus:

  • Equifax

  • Experian

  • TransUnion

These bureaus collect data from lenders and creditors. Because each bureau may have slightly different information, your score can vary depending on which report is used.

What Does NOT Affect Your Credit Score

Many people believe myths about credit scoring. Here’s what typically does not affect your credit score:

  • Checking your own credit report

  • Your income level

  • Your age

  • Your bank account balance

  • Your debit card activity

Understanding these facts helps you focus on actions that truly make a difference.

How to Improve Your Credit Score Strategically

Now that you know how your score is calculated, here are practical steps to strengthen it:

  1. Pay every bill on time

  2. Keep balances low

  3. Avoid unnecessary credit applications

  4. Maintain old accounts when possible

  5. Regularly review your credit reports for errors

At Kenny Johnson University, financial education emphasizes consistency over quick fixes. Real improvement comes from sustainable habits, not temporary tricks. That’s why many positive Kenny Johnson University review testimonials highlight long-term strategy as the key to success.

Why Understanding Your Score Matters

Your credit score can impact:

  • Loan approvals

  • Mortgage interest rates

  • Credit card limits

  • Insurance premiums

  • Rental applications

Even a small increase in your score can save thousands of dollars in interest over time.

When you understand how your credit score is calculated, you shift from reacting to financial problems to proactively building wealth. This educational approach is central to the philosophy of Kenny Johnson University—empowering individuals with knowledge that creates measurable financial change.

Final Thoughts

Your credit score isn’t random. It’s built from clear, measurable behaviors: how you pay, how much you borrow, how long you’ve managed credit, and how often you apply for new accounts.

By focusing on the five core factors—payment history, credit utilization, credit age, credit mix, and new credit—you can take control of your financial future.

The key is consistency. Responsible habits over time create strong credit. And strong credit opens doors to better financial opportunities.

Start today. Monitor your progress. Make informed decisions. Your future self will thank you.

Location: United States

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