The 5 Factors That Affect Your Credit Score

Whether you’re looking to get your first credit card for everyday expenses or take out a mortgage to purchase your first home, credit is an essential tool for helping people meet their financial goals.

Here, we’ll break down the 5 factors that influence your score-in order of most heavily weighted to least-and the simple yet effective steps you can take to give your score a boost.

Payment History


Payment history is the biggest single factor used to calculate your credit score. Late payments (even a couple of days). Past due accounts and accounts in collections all have a negative impact on your credit. Regular, on-time payments of the minimum amount (or greater) will improve your credit score. An on-time payment history in the range of 18 months or longer will begin to show results in a growing credit score.

Amount Owed


Your credit utilization is determined by the amount you owe—not relative to your income but, compared to the total credit limit available to you, expressed as a percentage. (For example, if your card balance is $600 and you have a spending limit of $2,500, your credit utilization is $600/$2,500 or 24%.) As a rule of thumb, your credit utilization should be no more than 30.

Credit Mix


Credit mix is determined by looking at the types of credit you are carrying (this includes credit cards, retail accounts, installment loans, mortgage loans, etc.) as well as your payment history in each area.

New Credit


Research shows that opening several credit accounts in a short amount of time represents a more significant risk— especially for people who don’t have an established credit history.

So, there you have it. These are the 5 factors that make up your credit score. Remember: Your credit score is based on patterns over time, with an emphasis on more recent information. Improving credit won’t happen overnight, but with persistence and consistency, your score should gradually improve over time!

Length of Credit History


Although not the most heavily weighted category, the length of a borrower’s credit history is important. It’s an indication to the financial institutions what kind of borrower you may be in the future. In addition to the overall time an individual has had credit accounts open, credit history is also determined by how long specific types of accounts have been open, and how long it’s been since those accounts have been used.