Credit Score Factors: An In-Depth Analysis

April 23, 2023

Credit Score Factors

Hey there! Are you curious about what goes into calculating your credit score? Understanding the various factors that influence your credit score is essential in taking control of your financial health.

In this article, we’re going to explore these credit score factors in depth, so you can better manage and improve your credit score.

Breakdown of Credit Score Factors

To begin, let’s dive into the five main factors that make up your credit score:

  1. Payment History (35%)
  2. Credit Utilization (30%)
  3. Length of Credit History (15%)
  4. Types of Credit (10%)
  5. New Credit (10%)

Let’s take a closer look at each of these factors and how they impact your credit score.

Payment History (35%)

Your payment history is the most significant factor affecting your credit score. Lenders want to know whether you’ve been paying your bills on time, as it’s a strong indicator of your ability to manage debt responsibly. Late payments, defaults, and collections can negatively impact your payment history, which in turn lowers your credit score.

To maintain a strong payment history, make sure you pay all of your bills on time. Set up payment reminders or automatic payments to ensure you don’t miss a due date. If you’ve had late payments in the past, don’t worry – their impact on your credit score will diminish over time, especially as you continue making timely payments.

Credit Utilization (30%)

Credit utilization refers to the percentage of your available credit that you’re currently using. To calculate your credit utilization, divide your total credit card balances by your total credit limits. Lenders prefer a lower credit utilization ratio because it shows you’re not overextending yourself financially.

A good rule of thumb is to keep your credit utilization below 30%. To achieve this, pay down your credit card balances, avoid maxing out your credit cards, and consider requesting a credit limit increase if you have a history of responsible credit usage.

Length of Credit History (15%)

The length of your credit history is another important factor in determining your credit score. This includes the age of your oldest account, the age of your newest account, and the average age of all your accounts. Lenders like to see a longer credit history because it provides more information about your financial behavior over time.

To maintain a positive credit history length, avoid closing your oldest credit accounts unless absolutely necessary. Also, be cautious when opening new accounts, as doing so can lower the average age of your credit history.

Types of Credit (10%)

The types of credit you have, also known as credit mix, make up 10% of your credit score. Having a diverse mix of credit, such as credit cards, auto loans, mortgages, and personal loans, can positively impact your credit score. This demonstrates to lenders that you can manage various types of credit responsibly.

While it’s not necessary to have every type of credit, it’s a good idea to maintain a healthy mix. However, don’t take on additional debt just to diversify your credit portfolio – only apply for new credit when it’s financially beneficial and manageable.

New Credit (10%)

The number of new credit accounts you’ve recently opened and the inquiries made by lenders when you apply for credit both influence your credit score. Opening multiple new accounts within a short period can be a red flag to lenders, as it may suggest financial strain or an increased risk of defaulting on payments.

To minimize the impact of new credit on your credit score, only apply for credit when necessary and avoid applying for multiple accounts in a short period. Additionally, remember that checking your credit score or report does not count as a hard inquiry and won’t harm your credit score.

Improving Your Credit Score: Tips and Tricks

Now that we’ve covered the factors that influence your credit score, let’s explore some practical tips and tricks to help you improve it:

  1. Review your credit report: Regularly reviewing your credit report can help you identify any errors or discrepancies that might be hurting your credit score. You’re entitled to a free copy of your credit report from each of the three major credit bureaus – Experian, Equifax, and TransUnion – once a year through
  2. Dispute inaccuracies: If you find any errors on your credit report, dispute them with the respective credit bureau. Correcting these inaccuracies can lead to an immediate improvement in your credit score.
  3. Set up payment reminders: To ensure timely payments, set up reminders for your bill due dates. Many financial institutions offer email or text reminders, and you can also use calendar apps or personal finance tools to stay on track.
  4. Reduce outstanding debt: Prioritize paying off high-interest debt first, and consider using a debt repayment strategy like the debt snowball or debt avalanche method. As you reduce your debt, your credit utilization will decrease, which can boost your credit score.
  5. Keep unused credit cards open: Closing unused credit cards can negatively impact your credit utilization and the length of your credit history. Unless there’s a compelling reason to close an account, such as high annual fees or poor customer service, keep it open to maintain a positive credit score.
  6. Request a credit limit increase: If you have a history of responsible credit use, consider requesting a credit limit increase from your credit card issuer. This can help lower your credit utilization ratio and potentially improve your credit score.
  7. Use a secured credit card: If you have poor or no credit, consider getting a secured credit card. These cards require a security deposit that serves as your credit limit. By using a secured card responsibly and paying your balance in full every month, you can build or improve your credit over time.
  8. Become an authorized user: If you have a family member or close friend with excellent credit, ask if they’d be willing to add you as an authorized user on their credit card account. As an authorized user, their positive credit behavior can contribute to your credit score. However, keep in mind that their negative behavior can also impact your credit, so choose wisely.

If you’re looking for more guidance and expert advice on improving your credit score, consider checking out the highly recommended book “Credit Secrets.” You can learn more about it at the previous link, or read my full review and experience here: Credit Secrets Book Review (My Results After Buying It)

This resource contains valuable information and strategies to help you take control of your financial health and achieve a better credit score.


Understanding the factors that influence your credit score is crucial for maintaining and improving your financial health. By focusing on these factors – payment history, credit utilization, length of credit history, types of credit, and new credit – you can take charge of your credit score and work towards a brighter financial future.

Remember, building or repairing your credit takes time and dedication, but with patience and persistence, you can achieve a strong credit score that will benefit you in various aspects of your life, from securing a mortgage to landing that dream job. Happy credit building!

About the author 

Jenna Lofton, an expert in stock trading, investing, and financial planning, combines over a decade of experience with rigorous academic training. Holding dual MBAs in Finance and Business Administration from the University of Maryland, Jenna's expertise is grounded in a deep understanding of the financial markets. Her career, which started on Wall Street, has evolved into empowering others through her insights and analyses in the dynamic world of finance.

Based in New York City, Jenna's approach is informed by her hands-on experience as a former financial advisor and her keen observation of market trends. She is known for translating complex financial concepts into actionable strategies, making her a valuable resource for both seasoned investors and newcomers to the stock market. Her commitment to financial literacy and her ability to demystify investment principles have made her a respected and authoritative voice in the investment community.

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