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How Credit Scores Are Calculated

Credit Score Calculations

Did you know that not having a credit card can hurt your credit? Seems like a catch 22, right? Well even if you don’t use credit, your credit score is an important number that lenders and even landlords or insurance companies use to make decisions about lending you money, renting you an apartment or pricing an insurance policy. Because credit scores are an important part of your financial well-being, it’s important to know how they are calculated, what’s a good credit score and how you can monitor what’s being reported about you

What is a Credit Score?

A credit score is a number that’s assigned to a person that gives lenders an idea of how well you could pay back a loan. The higher the number, the higher the probability that the loan will be repaid on time. There are different types of credit scores, but the most commonly used model is the FICO® credit score.

FICO Credit Score Criteria

Many banks use FICO® scores to determine your creditworthiness. This score is derived from three different credit reporting agencies, Experian, Equifax and Transunion, who all collect data on you throughout your life. FICO then assigns each person a score between 300 and 850. If you have a Premier Bank Credit Card, you can view your FICO® Score for free at

Here are the categories of information that are collected about you and the weight that they are given to determine your credit score:

1. Payment History = 35% of Credit Score

This largest portion of your credit score is determined by how often you pay your payments on time. Late payments may lead to a lower credit score. Use online and mobile banking to set up recurring or one-time payments.

2. Amount Owed = 30% of Credit Score

The total amount of debt you owe represents 30 percent of your score. Less is more in terms of a higher credit score.

3. Length of Credit History = 15% of Credit Score

Not having a credit history can hurt your score. The longer record you have of making timely payments, the higher your score will be.

4. Credit Mix Currently in Use = 10% of Credit Score

The types of credit used is another factor. Having experience repaying several types of loan commitments, like a combination of a car loan and a credit card, will help boost your score.

5. New Credit = 10% of Credit Score

New credit is a category that considers what new loans or credit cards you’ve recently taken on. Taking on several new debts in a short period can lower your number.

What’s a Good Credit Score?

At Premier Bank, we get asked this a lot. A credit score of 640 or higher usually allows you to qualify for most loan products, but a credit score of 680 is typically viewed as a "good" credit score. While the calculations for a credit score seem complex, there are several simple things you can do to increase your score, including keeping revolving debt, like credit cards, below 50 percent of the credit limit, paying your bills on time and not pulling your credit report too often.

Where Can You Find Your Credit Score?

Everyone is entitled to get a free credit report every twelve months. To get yours, simply visit or by calling 1-877-322-8228. It is always a good idea to review your credit report annually, even if you are not currently seeking a loan. Sometimes errors happen and lower your score without you knowing! Once you get your credit report, read our article on how to fix your credit for tips on what to look out for and how to dispute any errors.

A credit score can seem like a mysterious number that has considerable impact on your ability to borrow money, but it is important to take time to know your credit score, understand how it is derived and how to build and protect it.

With a Premier Bank Credit Card, you can view your FICO® Score for free, without harming your credit. Simply login to your credit card account, select the Account Services tab, click on FICO Score Display Preferences, and agree to the Terms and Conditions to get your score. We'll also provide a history and tips on what's impacting your score. If you’d like to talk to one of our bankers about your credit score or creditworthiness, contact us for more information.