Top 10 Main Factors Affecting Your Credit Score

From home loans to car financing, your credit score is the magic number for your monetary life. These are the top 10 factors that affect your score. 



On-Time Payments 

Timely payment of debt is the number-one factor that will help or hinder your credit score. According to the Privacy Rights Clearinghouse, payment history comprises 35 percent of your score. A solid record of paying bills on time is the best means of establishing and maintaining a solid score. 


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Amounts Owed 


The second-most important factor in determining your credit score, the amount of debt you owe makes a difference because it tells creditors how much of your available credit has already been used. This is seen as an indicator of how wisely you use credit.


factors that affect your credit score


There are different kinds of debt: 


  1. Installment debt, which you owe to a creditor who requires repayment of equal monthly payments over a fixed amount of time. These include auto loans and home mortgages.
  2. Revolving debt, which is repaid in monthly payments based on your current balance. These include retail store cards and credit cards.
  3. Open debt, where you pay your balance in full each month. This includes American Express cards.

Consumers with the best credit scores tend to carry debt ratios greater than 0 percent and less than 10 percent. 

Length of Credit History 

This factor makes up 15 percent of your credit score. Creditors take into consideration how long you’ve been handling credit, with the assumption that the longer your history, the greater your amount of responsibility. 


credit score factors

New Credit 

This comprises 10 percent of your score. According to the Federal Citizen Information Center in Pueblo, Colo., your credit score will be negatively impacted if you have recently tried to obtain new credit or opened new accounts. A single loan application is far less likely to have adverse affects than a spate of loan inquiries. 


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Other Factors 

A variety of other factors hold the remaining 10 percent of responsibility for your score. These include: 

  1. factors affecting credit scoreHaving a mix of credit types on your credit report, such as personal lines of credit, installment loans, and credit cards.
  2. Public records such as bankruptcies, judgments, or collection items.
  3. Accounts in use. Too many open lines of credit can negatively impact your score.
  4. Divorce or other temporary financial straits.
  5. Lifestyle factors such as moving or changing jobs frequently, which may indirectly impact your credit as they incur higher expenses.

The most direct way to impact your credit score is to establish a pattern of financial responsibility. By taking control of your financial life, paying down debt in a timely manner, and keeping a close eye on the number of accounts open in your name as well as your credit-to-debt ratio, you can increase your credit score over time. 

The Federal Reserve offers five tips for improving your credit over time here. Implementing these good habits, as well as keeping a consistent eye on your credit report, is the most certain way over time to establish and maintain good credit.