The gap between a strong credit score and a poor one can cost tens of thousands in higher interest over time. Most borrowers know the basics: pay on time, keep balances low, limit new accounts.
Fidelity Investments says stopping at the basics is exactly where millions of Americans leave money on the table. The firm recently published a guide identifying eight specific habits that separate people with strong credit from those without it.
Some of the habits are intuitive. Others contradict what most borrowers assume about how credit scoring actually works.
The national average FICO score just dropped due to payment history
The national average FICO Score fell to 715 in early 2025, dropping two points from the prior year as delinquencies rose across most borrower segments.
Fidelity’s guide identifies payment history as the single most important factor in your credit score, and the latest FICO data backs that claim up.
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Payment history accounts for roughly 35% of your FICO Score, making it the single largest component in the entire calculation, according to FICO.
One missed payment reported 30 days late can cause a measurable drop in your score, with the damage compounding with each additional missed cycle. Fidelity recommends enrolling in autopay, setting up billing alerts, or building a personal reminder system to guarantee you never miss a single due date.
Fidelity says your credit utilization ratio is the second-fastest lever you can pull
Your credit utilization ratio measures how much of your available credit you are currently using, and it accounts for roughly 30% of your FICO Score. Fidelity uses a clean example here. If your credit card has a $10,000 limit, you should aim to keep your outstanding balance at $3,000 or below.
That 30% threshold has been conventional wisdom for years, but FICO’s own data suggests top scorers go much further than that common benchmark.
People with the best FICO Scores tend to keep their average utilization below 6%, with fewer than three accounts carrying balances at any time, a FICO analysis published by CreditCards.com found.
Closing old credit cards can backfire on your score
The length of your credit history makes up about 15% of your FICO Score, and Fidelity’s advice here contradicts many borrowers’ natural instincts.
You might assume that canceling an old credit card you no longer use is a smart cleanup move, but it can shorten your average account age. A longer average account age signals to lenders that you have extensive experience managing debt responsibly over many years, Fidelity notes.
When closing a card still makes financial sense for you
Fidelity identifies two exceptions. When the card charges an annual fee you no longer want to pay, or it creates an overspending temptation you cannot control. Closing that oldest card could erase years of positive history from your credit score and reduce your available credit.
Hard inquiries affect your score, but rate shopping can be done safely
Every time you apply for a new credit card or loan, the lender pulls a hard inquiry on your report that typically lowers your score temporarily. Hard inquiries generally affect your FICO Score for about 12 months and stay on your credit report for a full two years, FICO data shows.
Fidelity highlights a critical exception most borrowers overlook. If you are shopping for the best mortgage or auto rate, submit all applications quickly.
The rate-shopping window every borrower should know about
Credit scoring models treat multiple loan applications within a 14- to 45-day period as a single inquiry when it is clear that you are comparison shopping.
“FICO remains committed to providing the industry with reliable, independent insights that help lenders make informed decisions and empower consumers to understand and manage their credit,” said FICO Senior Director of Scores and Predictive Analytics Tommy Lee.
Checking your own credit score is considered a soft inquiry, so you can monitor your progress as often as you want without negative consequences.
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A diversified credit mix could push your score into the highest tier over time
Your credit mix, which refers to the variety of credit types on your report, accounts for about 10% of your FICO Score and is often overlooked. Fidelity explains that experience with different credit types, including credit cards, auto loans, and mortgages, can help boost your score over time.
You should never borrow money you do not need just to diversify your report, but if a new loan fits your plan, know that it has credit-building value.
Checking your credit report regularly is free under federal law
Federal law entitles you to one free annual credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Fidelity recommends checking one report every four months to maintain continuous visibility into your credit throughout the calendar year.
Red flags to look for every time you review your credit report
- Incorrect account details, such as a payment falsely reported as late that you are certain you made before the actual due date.
- Overlooked past-due accounts you may have forgotten about, including old balances from years ago that still need to be resolved.
- Evidence of fraud or identity theft, such as credit inquiries or accounts you do not recognize and never authorized at any point.
If you find incorrect information, file a formal dispute with the reporting agency and pursue the issue directly with the creditor who reported it.
A low credit score affects your mortgage, auto loan, and insurance premiums
Credit scores can feel abstract until you see exactly how they translate into real dollars, especially when you are applying for a large loan. A borrower with a credit score of 760 or above will qualify for significantly lower mortgage rates than someone with a score in the low 600s.
On a $300,000 mortgage, that gap can save the higher-scoring borrower roughly $156 per month and over $56,000 in total interest over 30 years, myFICO’s loan savings calculator shows.
The credit score tiers that matter most when you borrow
- A score of 740 or above qualifies you for the best available interest rates on most consumer loan products across the board.
- Scores between 670 and 739 are considered good by FICO standards and will get you approved for most loans, but at slightly higher rates.
- Scores below 620 often mean higher rates, larger required down payments, and fewer lender options, which can cost you thousands over time.
Even a 20- to 30-point improvement in your score can move you into a cheaper rate tier, potentially saving you thousands of dollars on large balances.
Fidelity’s financial fitness framework connects your budget to your credit score
The firm’s final recommendation ties your credit score to your overall financial health because the two directly reinforce each other in measurable and lasting ways. Fidelity recommends its 60/30/10+15 budgeting guideline, which limits your essential expenses to 60% or less of your total take-home pay every month.
Three financial guardrails that protect your credit score every month
- Keep your total debt payments below 36% of your gross income, a threshold lenders commonly use to evaluate additional borrowing capacity.
- Maintain three to six months of living expenses in emergency savings so you never have to rely on credit cards for unexpected costs.
- Avoid taking on new debt impulsively, because each new account lowers your average credit age and triggers a hard inquiry on your report.
When you have emergency savings in place, you do not need to max out your credit cards the moment your car breaks down or a medical bill arrives. When you follow a budget consistently, you avoid the creeping balances that quietly push your utilization ratio into the danger zone over a few months.
Student loans are dragging millions of credit scores down right now
If your credit score dropped recently and you carry federal student loans, you are far from alone, and there is a very specific explanation behind it.
Federal student loan delinquencies started appearing on credit reports again in early 2025 after the CARES Act forbearance and a subsequent one year on-ramp period introduced by the Department of Education had both expired, FICO reported in April 2025.
The share of consumers with a 90-plus-day delinquency jumped from 7.4% to 8.3% by February 2025, surpassing pre-pandemic levels for the first time since 2020.
Gen Z consumers saw the largest average score decrease of any age group, falling three points year over year due to student loan obligations, FICO’s Credit Insights report found.
Where to start if you want to raise your credit score in the next 30 to 90 days
Fidelity’s eight-step framework is comprehensive, but you do not need to tackle all eight habits at once to see real and measurable improvement. If you want the fastest results, focus on the two factors that carry the most weight in the FICO model: your payment history and credit utilization.
Your first three moves to build credit-building momentum right away
- Set up autopay on every bill that offers it, starting with credit cards and loans, so you eliminate the risk of missed payments from day one.
- Pay down your highest-utilization credit card first to bring your overall ratio below 30%, and push it lower if you can comfortably afford it.
- Pull your free credit report from AnnualCreditReport.com and dispute any errors that could be dragging your score down without your knowledge.
Those two factors alone represent 65% of your total FICO Score, so addressing them first gives you the highest return on effort in the shortest time.
Building excellent credit is not an overnight project, but it is one of the most valuable financial habits you can develop for your long-term financial health. Treat your credit the way you treat staying in shape.
Consistent effort over time compounds in your favor, and the earlier you start, the better off you are.
Related: Fidelity reveals a paycheck change that could be worth six figures