What Factors Affect Your Credit Score?
Updated: Sep 22
For lenders, credit scores help predict how likely a person is to pay a loan back on time. If you want to achieve a higher score or just want to learn more about credit scores in general, you need to know what impacts your credit score.
Not knowing what affects your credit score certainly isn’t something to be embarrassed about — there are a variety of different scoring models and factors that even people who have a lengthy credit history may struggle to understand. Here, we’ll be going over the most influential factors that will affect your credit score, from most important to least.
The Factors That Affect Your Credit Score, Ranked
1. Payment History
Understanding what affects your credit score the most starts with payment history because it has the biggest impact. This is because it shows how likely you are to make payments on time and, if you do make any late payments, how late those payments are. How much a late payment affects your credit score depends on how much is owed. This accounts for 35% of your FICO Score.
2. Credit Usage
Credit usage is a rate calculated by dividing total debt by total available credit. The lower the rate, the better your credit score. If you utilize credit often and want to keep the rate lower, make early payments throughout the billing cycle. This makes up 30% of your FICO Score.
3. Credit History
Credit history involved the age of your oldest and newest accounts, the average age of your accounts, and whether you’ve used any accounts recently. Typically, the longer your credit history, the better your score. Credit history makes up 15% of your FICO Score.
4. Credit Mix and Types
Accounting for 10% of your FICO Score, credit mix refers to the different credit accounts you have. These can include car loans, student loans, mortgages, credit cards, and more. Typically, the more experience you have with different types of credit, the higher your score.
5. Recent Credit
Recent credit makes up 10% of your FICO Score and includes both recent credit accounts you’ve opened, and the number of hard inquiries lenders have made. A hard inquiry is when a lender checks your credit before making a lending decision.
These percentages reflect FICO's general scoring model; the exact weighting can shift slightly based on your individual credit profile (myFICO).
Now That You Understand What Affects Your Credit Score, Do You Know What Your Score Is?
AnnualCreditReport.com is the site authorized by federal law to give you free credit reports from all three major credit bureaus — but it provides your credit report, not your credit score. To check your actual score, look for a free score tool through your bank or credit card issuer (many include one at no added cost), or check with the credit bureaus directly, since scores are sometimes offered as a separate, often paid, add-on to your free report.
Now that you have a good idea of what affects your credit score, you can leverage this knowledge to improve your score and increase your chances to qualify for a loan. Jumpstart Finance is more than happy to help you understand more about qualifying for an unsecured loan. Submit your inquiry and connect with a Loan Advisor today.
