What Factors Impact My Credit Scores the Most?

Understanding your credit score doesn’t have to be complicated. Once you know the basics of what makes it tick and how lenders use it to evaluate your creditworthiness, you can become a total credit score pro in no time.

First, what is a credit score?

Credit scores are three-digit numbers that typically range from 300 to 850, with the lowest number indicating to lenders that you’re a high-risk borrower. There are five factors used by the scoring models companies, including FICO® Score1 and VantageScore®2, that make up your credit score. Once created using data pulled from your credit report(s) (your borrowing and payment history), your score is used by lenders to determine how likely you are to repay your debt. Your credit score is critical because it’s often the crucial factor in deciding if you get approved or declined for credit or a loan.

If your credit score is on the lower end of the range, knowing the factors that affect your score the most can help you improve your score and achieve your goals over time.

The Factors

Although the scoring models, FICO® Score1, the score most commonly used by lenders, and VantageScore®2, the model created by the three major credit bureaus, vary, the credit score factors that affect your score the most are generally the same. Here they are:

  1. Payment history. This factor is first because it has the most impact on your credit score. Payment history gives lenders a detailed look into how you pay your debts. It’s so critical that even one missed payment can harm your score. When considering you for new credit, such as a car loan or a big-ticket item like a mortgage, lenders want assurances that you will pay back your debt on time.
  2. Credit utilization. Credit utilization is how much total revolving credit you have vs. how much credit you are using. Specifically, it’s called the credit utilization ratio, and credit experts suggest not using more than 30% of your available credit at any given time.
  3. Length of credit history is the next factor that impacts your credit score the most. When making lending decisions, lenders look at three things. 1) The age of your oldest credit account, 2) The age of your newest credit account, and 3). The average age of all of your credit accounts. This credit score factor matters because, generally, the longer your credit history, the higher your credit scores will be.
  4. Credit mix. Having various credit accounts, such as a student loan, credit card, retail card, and auto loan, shows lenders that you can manage a wide range of credit products. People with higher credit scores often have a diverse credit portfolio.
  5. New credit. When it comes to credit, ‘new’ is often seen as an increased risk to a lender. While it falls lower on the factor list, it still counts. The number of credit accounts you’ve recently opened, along with the number of hard inquiries you have (when lenders look at your credit when you apply for credit), can signal that you have too many accounts and requests for credit, which can hurt your credit score.

Getting the credit you deserve requires equal parts education and consistent application. Once you know how to navigate your credit and how it impacts your credit scores, you can better manage it.

For more tips on how to improve your credit health, visit the Credit Education Center.

1 Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn More.

2 Calculated on the VantageScore 3.0 model. Your VantageScore 3.0 from Experian® indicates your credit risk level and is not used by all lenders, so don’t be surprised if your lender uses a score that’s different from your VantageScore 3.0. Click here to learn more.