What Affects Your Credit Scores?

Quick Answer

Credit scoring systems comb and analyze credit reports to evaluate how you manage credit. They focus on factors such as your payment history, your total debt, usage of available credit, length of credit history, credit mix and new credit.

Woman using laptop to check credit score while holding credit card at the desk by the window

Credit scoring systems such as the FICO^® Score^☉ ^Θ and VantageScore^® analyze credit report information to predict whether you'll pay your debts as agreed. Their software essentially uses advanced algorithms to comb your credit history for signs of good (and bad) credit management habits.

The calculations that produce credit scores are closely kept trade secrets, but the underlying factors they consider (as well as how they're weighted) are public knowledge. The following factors and percentage weightings apply to the FICO^® Score, which is used by 90% of top lenders.

VantageScore credit scoring factors differ somewhat, but adopting the habits described below will promote improvement on any credit score derived from credit report data. Here are the key factors that influence your credit scores, plus steps you can take to improve each factor.

Factors That Determine Credit Scores

1. Payment History: 35%

Payment history has the single biggest impact on your credit, which means paying your bills on time every month is key to building and maintaining good credit. Just one payment made 30 days late or more can do significant harm to your scores, and the negative impact can become more severe the further behind you fall on payments. An account sent to collections, a foreclosure or a bankruptcy can have even deeper, longer-lasting consequences.

Payment history makes up 35% of your FICO^® Score.

Key moves to make: Make all your debt payments on time every month. To ensure you don't forget, set up autopay or enable text alerts for payment due dates. If you anticipate struggling to afford your minimum payments, contact your creditors right away to negotiate a hardship plan. If you're already behind on payments, learn about how to bring your accounts current to mitigate the damage. Reach out to a nonprofit credit counselor if you're feeling overwhelmed by payments and need help.

Learn more: How to Improve Your Payment History

2. Amounts Owed: 30%

The total amount you've borrowed affects your credit score, as does the portion of your available credit in use. Your credit utilization ratio or rate, the percentage of your borrowing limit you're using on your credit cards and other revolving credit accounts, is a significant factor in this category.

What credit utilization should you aim for? Those with the highest credit scores tend to have utilization ratios below 10%, but the lower, the better. Broadly speaking, keep your credit utilization ratio below 30% to avoid a more substantial negative impact on your credit scores.

Amounts owed are responsible for 30% of your FICO^® Score.

Key moves to make: Paying down installment loans, such as auto loans and personal loans, has a positive impact. If you're carrying high credit card balances, start paying them off to improve your credit utilization ratio. Calculate your current credit utilization ratio using the steps below. Then, aim to bring your utilization below 30%.

To calculate your credit utilization, divide your outstanding balance on each revolving account by its credit limit and multiply by 100 to express the result as a percentage. Credit scoring systems consider the utilization rate on each account individually and on the total of all accounts, as in the following example:

Credit Card Utilization Rate Example
	Credit Limit	Balance	Utilization (Balance/Limit)
Credit card 1	$6,500	$1,600	25%
Credit card 2	$4,800	$1,500	31%
Credit card 3	$8,000	$1,300	16%
Total credit card utilization	$19,300	$4,400	23%

Learn more: Which Debts Should I Pay Off First to Improve My Credit?

3. Length of Credit History: 15%

It makes intuitive sense that experience with credit accounts will tend to make you better at managing debt, and that's borne out by statistical analysis. For that reason, all else being equal, the longer your credit history, the higher your credit score will tend to be. The FICO^® Score evaluates your experience with credit by measuring the age of your oldest credit account, the age of your newest credit account and the average age of all your accounts.

Note that closing accounts and paying off loans in full caps the payment history for those accounts, but it doesn't immediately cancel out their ages for purposes of calculating length of credit history. Accounts you close in good standing (meaning with no late payments) remain on your credit report for as long as 10 years.

The length of your credit history accounts for 15% of your FICO^® Score.

Key moves to make: If you don't have any credit accounts, you can start building a credit history by researching credit products well-suited to your needs. For example, you could consider applying for a secured credit card or asking to be added as an authorized user on the credit card of a trusted loved one. If you already have credit cards, keeping them open can help you maintain your credit history. That said, if a card charges annual fees or tempts you to overspend, closing it may be better for your finances overall.

Learn more: Should You Cancel Your Unused Credit Cards or Keep Them?

4. Credit Mix: 10%

The ability to successfully manage multiple debts and different credit types tends to benefit your credit scores. Credit scoring systems favor a mixture of installment debt (such as student loans, mortgages, car loans and personal loans) and revolving accounts (credit cards and lines of credit).

Credit mix makes up 10% of your FICO^® Score.

Key moves to make: It's a good idea to balance the pros and cons of various credit accounts when you're considering your credit mix. It's typically best to apply for new credit only when you need it, rather than to add a new type of account to improve your credit mix; instead, it may pay off to focus on the higher-impact score factors above. Your credit mix is likely to improve if you use the types of credit you need over time—such as a credit card or a mortgage—and then demonstrate responsible management of these accounts.

5. New Credit: 10%

It's a statistical fact that new debt raises the odds you'll fall behind on your old debts. Credit scoring systems, therefore, may ding your score a small amount in response to hard inquiries—entries that appear on your credit report when a lender processes a credit application from you. Your credit will usually decrease less than five points per inquiry, and if you keep up with your bills, your score will typically rebound within a few months.

Hard inquiries are not all treated the same, however. Credit scoring models see rate shopping for the best rates and terms on installment loans such as mortgages, car loans and student loans as positive behavior. In these cases, they lump together hard inquiries on the same type of loan made within a short period of time (two weeks to be safe) and consider them as one inquiry. Note that hard inquiries made in relation to credit card applications don't get this same treatment: Each inquiry is considered separately, and can have a bigger impact if you apply for several cards in a short time span.

New credit is responsible for 10% of your FICO^® Score.

Key moves to make: Limit hard inquiries on your credit report by only applying for new credit when you need it. Before you apply for a credit card or loan, get prequalified for a stronger sense of whether you may be able to get approved. When you're shopping for a large loan, such as a mortgage, and need to compare loan terms, take advantage of rate shopping by sticking to a focused 14-day shopping window.

Frequently Asked Questions

How Do I Check My Credit Score?

You can check your credit score in a variety of ways: through many financial institutions and credit card websites and apps, at websites that offer scores as part of free subscription services, or directly from the national credit bureaus. You can also check your FICO^® Score based on Experian data for free.

Can Service Accounts Impact My Credit Score?

Recurring payments to utilities and other services such as cable and cellphone are not traditionally included in credit reports. However, if you share your payment history through the Experian Boost^®^ø^®^ø feature, these payments could immediately benefit your FICO^® Scores based on Experian credit data.

What Can Hurt Your Credit Scores?

The following actions could hurt your credit scores:

Missing payments: Mentioned above, but well worth repeating: Even one payment made 30 days late or missed altogether can hurt credit scores significantly.
Using too much of your available credit: Lenders may view high credit utilization as a sign of overdependence on credit. Utilization and overall debt account for 30% of your FICO^® Score.
Seeking a lot of credit in a short time: As noted above, each time a lender requests your credit reports for a lending decision, a hard inquiry is recorded in your credit file. With the important exception of rate shopping for installment loans, many credit inquiries around the same time can have a compounding effect on your credit score.
Defaulting on accounts: Often defined as going 90 days or longer without making a scheduled debt payment, a default is a major negative mark on your credit report and can lead to more severe consequences, such as foreclosure, repossession, charge-offs, settled accounts and even bankruptcy.

How Can I Improve My Credit Score?

Once you understand the chief factors that determine credit scores, it's not hard to work out the actions you can take to improve your credit scores:

Pay your bills on time. Do it every month, without fail, using any strategy for avoiding late payments that works for you.
Pay down high balances. Reducing balances on credit cards and other revolving accounts can be one of the quickest ways to improve your credit scores.
Review your credit reports regularly. While credit report errors are rare, you have the right to dispute entries on your credit reports, including some that could be hurting your credit scores. Be sure to check your reports from all three major consumer credit bureaus: Experian, TransUnion and Equifax.
Limit new credit applications. Credit scoring systems recognize the wisdom of shopping for the best terms on a car loan, mortgage or other installment loan, but multiple credit card applications can rack up hard inquiries that hurt your credit scores. If you want to compare credit card offers, consider getting prequalified, which gives you a good idea of the terms you can get without generating hard inquiries. You can view credit cards fit to your credit profile for a sense of what you might qualify for.
Make up for missing payments. If you have any past-due payments, bring your accounts up to date to prevent further damage to your credit scores.
Be patient. As your credit history lengthens, your credit scores will tend to improve, and time will diminish the ill effects any missteps may have had on your scores. So, if you adopt good habits and stay the course, you could see steady improvement in your credit scores.

Learn more: How to Improve Your Credit Score

What Can I Do if I Don't Have a Credit Score?

If you're new to personal credit, your lack of credit history may mean you can't get a credit score, which can make it hard to qualify for the credit you need to establish a credit history. Fortunately, there are several proven approaches that can help you establish a credit score, including:

Try Experian Go^™. You can take your first steps toward building credit for free using Experian Go, which helps you establish a credit file and provides insights to help you get a FICO^® Score.
Get a secured credit card. A secured credit card works like a conventional credit card, but requires a security deposit—typically a couple hundred dollars—which usually serves as your credit limit. Making purchases with the card and paying your bill on time helps establish a credit report and score, and a positive payment history.
Become an authorized user. If you are close with someone with a credit card (and, ideally, a good credit history), becoming an authorized user on their account could jump-start your credit history. Authorized users get cards in their own names and spending privileges on the main cardholder's account. Confirm that the card issuer reports authorized-user activity to the credit bureaus; if it does, you should be eligible for a FICO^® Score of your own after about six months of card usage.
Consider a credit-builder loan. A credit-builder loan is a small loan, typically available at a minimum loan amount of $500 from many credit unions and some banks. They are designed to help you save money and establish a payment history at the same time: You take out the loan, and the money you borrow is placed in a special savings account that earns interest but is off-limits to you until you pay off the loan (typically over a term of six to 24 months). If you fail to make payments, the lender keeps the loan amount; but if you pay off the loan, you will have amassed a bit of savings and established a positive payment record.
Try Experian Boost. This free feature lets you share payment information on recurring expenses such as utility and cellphone bills, rent you pay online, streaming services and more, and have it reflected in your Experian credit report. Experian Boost can help you establish a credit report if you don't have one and could help you improve your credit scores based on Experian credit data.

Learn more: How to Establish Credit if You're Unscoreable

The Bottom Line

Understanding the factors that go into credit scores can help you recognize the connections between your behaviors and your scores. While there are factors beyond your control (you can't instantly gain 10 more years of credit management experience, for instance), you can make choices today that affect your credit scores relatively quickly.

Adopting good credit habits that align with credit scoring factors and sticking to them over the long haul is the key to steady credit score improvement. To monitor your progress, you can sign up for free credit monitoring from Experian.

Learn More About What Affects Your Credit Score

What’s the Most Important Factor of Your Credit Score?
The most important factor of your FICO Score is your payment history, which makes up 35% of your score. Here’s what other factors matter.
What Is a Credit Utilization Rate?
Your credit utilization rate is the percentage of your revolving accounts’ balances that you’re using.
How to Improve Your Payment History
Maintaining a clean payment history—or refurbishing a spotty one—can help you improve your credit scores and save you money.
How Does Length of Credit History Affect Your Credit?
The length of your credit history can directly impact your credit scores, and this scoring factor is often misunderstood.

How Good Is Your Credit Score?

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What Affects Your Credit Scores?

Factors That Determine Credit Scores

1. Payment History: 35%

2. Amounts Owed: 30%

3. Length of Credit History: 15%

4. Credit Mix: 10%

5. New Credit: 10%

Frequently Asked Questions

How Do I Check My Credit Score?

Can Service Accounts Impact My Credit Score?

What Can Hurt Your Credit Scores?

How Can I Improve My Credit Score?

What Can I Do if I Don't Have a Credit Score?

The Bottom Line

Learn More About What Affects Your Credit Score

What Makes a Good FICO^® Score?

How Good Is Your Credit Score?

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Factors That Determine Credit Scores

1. Payment History: 35%

2. Amounts Owed: 30%

3. Length of Credit History: 15%

4. Credit Mix: 10%

5. New Credit: 10%

Frequently Asked Questions

How Do I Check My Credit Score?

Can Service Accounts Impact My Credit Score?

What Can Hurt Your Credit Scores?

How Can I Improve My Credit Score?

What Can I Do if I Don't Have a Credit Score?

The Bottom Line

Learn More About What Affects Your Credit Score

What Makes a Good FICO® Score?

How Good Is Your Credit Score?

Resources

Latest Research

Latest Reviews

What Makes a Good FICO^® Score?