The 5 Factors That Determine Your Credit Score
Understand exactly how your credit score is calculated. Learn about the five factors and how to optimize each one for a higher score.
Key Takeaways
- Payment history is the most important factor (35%)
- Credit utilization is the second biggest factor (30%)
- Longer credit history is better (15%)
- A mix of credit types helps (10%)
- Too many new accounts hurts (10%)
Credit Score Factor Overview
Your FICO credit score is calculated using five categories of information from your credit report. Understanding these factors helps you know where to focus your efforts for the biggest impact.
Payment History (35%)
Your payment history is the single most important factor in your credit score. Lenders want to know: do you pay your bills on time?
What's Included
- On-time vs. late payments
- How late payments were (30, 60, 90+ days)
- How recent late payments are
- How many accounts have late payments
- Collections, charge-offs, bankruptcies
How to Optimize
- Set up autopay: Never miss a payment again
- Pay at least minimums: Even if you can't pay in full
- Set payment reminders: Backup for autopay failures
- Dispute errors: Remove inaccurate late payments
One Late Payment Can Hurt a Lot
A single 30-day late payment can drop your score by 100+ points if you had excellent credit. The impact is less severe if your score was already low, but it's still significant.
Amounts Owed (30%)
This factor primarily measures your credit utilization—how much of your available credit you're using. Lower is better.
What's Included
- Credit utilization (balances ÷ limits)
- Number of accounts with balances
- Installment loan balances vs. original amounts
- Total amount owed across all accounts
How to Optimize
- Keep utilization below 30%: Under 10% is ideal
- Pay before statement date: Lower reported balance
- Request credit limit increases: More available credit
- Don't close old cards: Maintains available credit
Utilization Targets
- Excellent: Under 10%
- Good: 10-29%
- Fair: 30-49%
- Poor: 50%+
Length of Credit History (15%)
Longer credit history generally means higher scores. This factor rewards consumers who have managed credit responsibly over time.
What's Included
- Age of oldest account
- Age of newest account
- Average age of all accounts
- How long specific accounts have been open
- How long since accounts were used
How to Optimize
- Keep old accounts open: Even if you don't use them
- Become an authorized user: Inherit someone's history
- Don't open many new accounts: Lowers average age
- Use old cards occasionally: Prevents closure
Time Is Your Friend
You can't speed up this factor—it just takes time. Focus on the factors you can control more quickly (payment history and utilization) while letting your history age naturally.
Credit Mix (10%)
Having different types of credit shows lenders you can manage various credit products responsibly.
Types of Credit
- Revolving credit: Credit cards, retail cards, HELOCs
- Installment loans: Mortgages, auto loans, personal loans
- Open accounts: Charge cards (paid in full monthly)
How to Optimize
- Don't open accounts just for mix—not worth the hard inquiry
- If you need credit anyway, consider what adds diversity
- Having both revolving and installment credit helps
New Credit (10%)
Opening many new accounts in a short time is risky behavior that can lower your score.
What's Included
- Number of recent hard inquiries
- Number of recently opened accounts
- Time since new accounts were opened
- Time since inquiries
How to Optimize
- Only apply when needed: Each application = inquiry
- Rate shop within 14-45 days: Multiple mortgage/auto inquiries count as one
- Space out applications: Don't apply for everything at once
- Use pre-qualification: Soft inquiry, no score impact
Credit Report Errors Dragging Down Your Score?
Inaccurate late payments, wrong balances, and other errors can hurt every factor of your credit score. Our platform helps you identify and dispute errors.
Frequently Asked Questions
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