The 5 Most Important Factors That Impact Your Credit Score


Your credit score impacts your ability to purchase a home, finance a vehicle, rent a new apartment, and more. Improving your credit score can feel like a guessing game without understanding the important credit score factors contributing to the number. Everything from making payments on time to your credit utilization ratio impacts your credit score.

So, what factors impact your credit score? Read below to learn the top five factors impacting your credit score, what they mean, and how to use this information to boost your credit score.

What Does Your Credit Score Mean?

Your FICO® score comes from information that various lenders provide to the three main credit bureaus: Experian, TransUnion, and Equifax. FICO® credit scores range from 300 (poor) to 850 (exceptional). Before discussing how FICO® develops these credit scores, let’s look into the categories so you can understand where your credit score falls.

The FICO® credit score category ranges are as follows:

  • Poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739
  • Very good: 740 to 799
  • Exceptional: 800 to 850

You can typically check your credit score through your card issuer or bank without harming your score. You may also request free credit reports every 30 days from Experian. provides weekly free credit reports from all three major bureaus until the end of 2023.

The 5 Factors Impacting Your Credit Score

Now that you know your credit score and where it falls on the FICO® category scale, let’s look at the important score factors shaping your ability to borrow funds.

Your Payment History

Your payment history accounts for 35% of your credit score, making it the most important factor. Whether or not you’ve made payments on time and in full for past and current lines of credit affects your payment history. The details around your late payments, like how late you paid and whether or not you paid in full, also affect the payment history factor of your credit score.

You can improve your payment history (and, by extension, your credit score) by always making payments on time and in full. We recommend setting up features like auto-pay so bills are automatically paid for you. If you have many open lines of credit, consider consolidating your debt to make payments more manageable.

You should fulfill late payments before applying for new credit. Most lenders will not want to offer you credit if they see a lot of overdue debt in collections.

Your Existing Debt

Your amounts owed account for 30% of your credit score, making it the second-most important factor. FICO® defines your existing debt as your current credit usage compared to the amount you can borrow, also called the credit utilization ratio. The amount of debt (outstanding payments) compared to your maximum credit limit for each account and, in total, is the ratio that factors into your credit score.

You can calculate your amounts owed by dividing your current balances by your account limits. For example, if you owe $2,000 on your credit card and it has a maximum borrowing limit of $10,000, you would divide $2,000 by $10,000. In this example, you’re using 20% of your credit limit.

Keep in mind that your ratio extends beyond just one credit card. You must account for all of your open lines of credit. Credit lines for an installment loan, like an auto loan or mortgage, do not affect your ratio.

Most financial advisors recommend keeping your credit utilization ratio below 30% for optimal credit score results. The best way to reduce your credit utilization and existing debt is by paying off your credit card debt.

Your Credit History

The length of your credit history accounts for 15% of your credit score. A longer credit history boosts your credit score because it shows you have a history as a trustworthy borrower. FICO® considers the following factors in its credit scoring models:

  • How long you’ve had your credit accounts
  • How long you’ve had your oldest account and newest account
  • The average age of all your accounts
  • How long you’ve established specific credit accounts
  • How frequently you use specific accounts

When you open new credit accounts, your average account age drops, but you also establish more borrowing history. To improve your credit history, avoid closing old accounts to keep your average age as old as possible. You should also avoid account inactivity by frequently making small transactions on every account and paying them off within the required period.

Hard Credit Inquiries

New credit inquiries account for 10% of your credit score. When you apply for a new loan or line of credit, the lender must check your credit score, which typically involves a hard inquiry. Every time you apply for new credit with a hard inquiry, your credit score will drop by a few points, though it should only stay on your credit report for a couple of years at most.

To a lender, a large number of new credit inquiries in a short period is often a red flag. Luckily, many lenders lump hard credit inquiries together when you’re shopping around for the best rate. You may also find that modern lenders now advertise “soft” credit inquiries that do not harm your credit score.

To prevent hard inquiries from damaging your credit score, only apply for credit when necessary, reduce your number of applications, and look for lenders that offer soft inquiries.

The Types of Credit You Have Open

Your credit mix makes up the final 10% of your credit score. The different types of credit include:

  • Retail accounts
  • Credit cards
  • Installment loans
  • Mortgages
  • Finance accounts

Maintaining a diverse credit mix can improve your credit score by showing lenders your financial responsibility. For example, consider setting up a credit card account, auto loan, and department store credit card rather than opening three credit cards. You can rotate different types of credit in and out, but try to keep your accounts diverse.

Learn How to Improve Your Credit Score

Now that you know the most important credit score factors, you can begin improving your score. Contact Boost Your Score at 1-800-259-1270 to learn more from our team.

Disclaimer: Boost Your Score does not offer financial advice. The information presented on this page is intended for general consumer awareness and does not constitute legal, financial, or regulatory counsel. This content does not represent the perspectives of any issuing banks. While the information might include third-party references or content, Boost Your Score does not validate or guarantee the third-party information's precision. Internal links are promotional content for Boost Your Score products. Please take into account the publication date of Boost Your Score's original content and any related content to fully grasp their contexts.

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The team at Boost Your Score has over 50 years of combined experience in credit building. Our goal is to help individuals take control of their financial destiny and improve their credit scores. We provide guidance and support regardless of your credit history, whether you're just starting your credit journey or looking to take your score to the next level.

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