What Actually Affects Your Credit Score?
Understanding the factors behind your credit score can help you make more informed financial decisions.
Your credit score is more than just a number. It helps lenders evaluate how you’ve managed credit and how likely you may be to repay borrowed money.
Credit scores can influence whether you qualify for certain financial products, the interest rates you’re offered, and other lending terms.
But what actually determines that number?
Let’s explore the five major factors commonly used in FICO credit scoring.
1. Payment History — 35%
Your payment history generally has the greatest influence on your FICO Score.
It reflects how consistently you’ve made payments on credit accounts, including credit cards and loans.
Late payments, missed payments, and certain negative credit events can affect your score.
Helpful tip: Consider setting up payment reminders or automatic payments to help avoid missing due dates.
2. Amounts Owed — 30%
This category includes how much you owe and how you’re using available credit.
One important measure is your credit utilization ratio—the percentage of your available revolving credit that you’re currently using.
For example:
Credit card | Amount |
Credit limit | $2,000 |
Reported balance | $600 |
Credit utilization | 30% |
In this example, you’re using 30% of your available credit.
Generally, lower utilization is better for credit scoring, although no single percentage guarantees a particular score.
Helpful tip: Keeping credit card balances low relative to your credit limits may positively affect your credit score.
3. Length of Credit History — 15%
Credit scoring models also consider how long you’ve been managing credit.
Factors may include the age of your oldest account, the average age of your accounts, and how long specific accounts have been established.
A longer history of responsible credit management can be beneficial.
Helpful tip: Before closing an older credit card, consider how the change could affect your available credit and overall credit profile.
4. New Credit — 10%
Applying for new credit can sometimes result in a hard inquiry on your credit report.
Hard inquiries may temporarily affect your score, particularly when several applications occur within a short period.
However, checking your own credit report is considered a soft inquiry and does not lower your credit score.
Helpful tip: Apply for new credit based on your financial needs rather than opening multiple accounts unnecessarily.
5. Credit Mix — 10%
Credit mix refers to the different types of credit accounts in your history.
These might include credit cards, auto loans, mortgages, and other installment loans.
Experience managing different types of credit can contribute to your overall credit profile.
However, you don’t need to open additional accounts or take on unnecessary debt simply to improve your credit mix.
Do You Have More Than One Credit Score?
Yes.
Different lenders may use different scoring models, including versions of FICO and VantageScore.
Your scores can also differ depending on which credit bureau supplies the information and when the score is calculated.
The five percentages discussed in this article describe the general categories used by FICO scoring. They are not a universal formula for every credit score, and their relative importance can vary by individual and scoring model.
How to Review Your Credit Reports
Understanding your credit starts with knowing what’s being reported.
You can review your credit reports from the three major credit bureaus:
Equifax
Experian
TransUnion
Through AnnualCreditReport.com, consumers can currently access free online credit reports from each of the three major credit bureaus once a week.
Review your reports for unfamiliar accounts, incorrect balances, and other potential inaccuracies.
If you identify an error, you have the right to dispute inaccurate information.
Checking your own credit report will not lower your credit score.
Building Credit Takes Consistency
There isn’t one action that guarantees a higher credit score.
Credit scores reflect several aspects of your credit history, and changes may take time to appear.
Understanding how these factors work can help you evaluate financial decisions and develop responsible credit habits.
At First Focus Financial Solutions, our goal is to make financial education easier to understand so you can make informed decisions about your financial future.
Helpful Resources
Consumer Financial Protection Bureau — Understanding Your Credit Score
FICO — What’s in Your Credit Score?
Federal Trade Commission — Free Credit Reports
Official Credit Report Website
Educational Disclaimer: This article is provided for general financial education and informational purposes only. It does not constitute personalized financial, legal, tax, or credit advice. Credit scoring results depend on the scoring model and individual credit history.
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