What Affects Your Credit Score: The 5 Factors
Learn the five factors that determine your credit score, their weightings, and common myths. Understand what you can control and what takes time.
A credit score is a three-digit number that lenders use to assess the likelihood you will repay borrowed money. The two main scoring models in the United States are FICO and VantageScore. Both use information from your credit reports to calculate your score, and both weigh similar factors, though the exact percentages differ. Understanding these factors helps you know what actions might improve your score and which common beliefs are myths.
The five factor groups are: payment history, amounts owed (credit utilization), length of credit history, new credit, and credit mix. Each contributes a different percentage to your FICO score, and VantageScore uses similar categories with different weights. The table below summarizes the typical weightings and what they mean for you.
| Factor | FICO Weight | VantageScore Weight | When It Does NOT Apply |
|---|---|---|---|
| Payment History | 35% | 40% | If you have no credit accounts at all, there is no payment history to score. |
| Amounts Owed / Utilization | 30% | 20% | If you have no revolving credit (like credit cards), utilization is not a factor. |
| Length of Credit History | 15% | 21% | If you are new to credit, you have no history, so this factor is not meaningful. |
| New Credit | 10% | 11% | If you have not applied for credit recently, this factor has little impact. |
| Credit Mix | 10% | 5% | If you have only one type of credit, the mix is limited and may not affect your score much. |
Note: These percentages are published by FICO and VantageScore as general guidance. Your individual score may vary based on the specific scoring model used.
Payment History: The Biggest Factor
Payment history is the most heavily weighted factor in both FICO and VantageScore. It reflects whether you have paid your credit obligations on time. Late payments, collections, bankruptcies, and other negative items can stay on your credit report for seven to ten years. Even one late payment can cause a significant drop in your score, especially if it is recent.
What you can control: Making all payments on time is the single most effective way to maintain a good score. Setting up automatic payments or reminders can help avoid missed due dates. If you have missed a payment, the impact lessens over time as the negative item ages.
Amounts Owed: Credit Utilization
The second most important factor is the amount you owe relative to your credit limits, known as credit utilization. For revolving accounts like credit cards, utilization is calculated by dividing your total balances by your total credit limits. A lower utilization ratio is better; staying below 30% is often recommended, and the lowest scores are associated with utilization above 50%.
What you can control: Paying down credit card balances can lower your utilization. You can also request a credit limit increase, but that may trigger a hard inquiry. Utilization has no memory in most scoring models—once you pay down a balance, your score can recover quickly.
Length of Credit History: Time Matters
The length of your credit history considers the age of your oldest account, the average age of all your accounts, and how long specific accounts have been open. A longer history generally helps your score because it gives lenders more data on your behavior.
What you can control: This factor builds over time. You cannot speed it up, but you can avoid closing old accounts, which can shorten your average account age and reduce your available credit. The effect of closing an account depends on your overall credit profile.
New Credit: Hard Inquiries
New credit refers to how many new accounts you have opened and how many hard inquiries appear on your credit report. A hard inquiry occurs when a lender checks your credit as part of a loan application. Multiple inquiries in a short period can lower your score, but the effect diminishes over time. Rate shopping for a mortgage or auto loan is treated as a single inquiry if done within a certain window (typically 14-45 days depending on the model).
What you can control: Avoid applying for credit you do not need. Each application can cause a small, temporary dip in your score. If you are shopping for a loan, do so within a short period to minimize the impact.
Credit Mix: Variety of Accounts
Credit mix looks at the different types of credit you have, such as credit cards, installment loans (like auto or student loans), and mortgages. Having a variety can slightly improve your score, but it is the least heavily weighted factor. It is not worth taking on debt just to improve your mix.
What you can control: You can choose to have different types of credit, but this is a minor factor. Focus on the other four factors first.
Common Myths About Credit Scores
Many misconceptions circulate about credit scores. Here are the most common myths and the reality.
Myth: Checking your own credit score lowers it
Checking your own credit report or score is a soft inquiry and does not affect your score. Soft inquiries are not visible to lenders and have no impact. You can check your credit reports for free once a year from each of the three major bureaus at AnnualCreditReport.com, and many credit card issuers provide free score access.
Myth: Closing old credit cards improves your score
Closing a credit card can actually hurt your score because it reduces your total available credit, which may increase your utilization ratio. It can also shorten your average account age if the account is old. Unless the card has an annual fee and you do not use it, it is often better to keep it open.
Myth: Carrying a small balance on your credit card helps your score
Carrying a balance from month to month does not help your score. What matters is your utilization ratio at the time your credit report is pulled. Paying your balance in full each month keeps your utilization low and avoids interest charges. You do not need to carry a balance to build credit.
Myth: Your income affects your credit score
Your income is not part of your credit score. Lenders may consider your income when deciding whether to approve you, but it does not appear on your credit report or affect your score.
Myth: A credit score is a single number used everywhere
There are many different credit scores. FICO and VantageScore are the most common, but each has multiple versions. Lenders may use different models, so the score you see from one source may differ from what a lender uses.
Why People Make These Mistakes
The most common mistake people make is focusing on the wrong actions, such as closing old cards or carrying a balance, because they believe these will improve their score. These myths persist because they are repeated in casual advice and sometimes by well-meaning friends. The reality is that the two most important factors—payment history and utilization—are directly within your control. By paying on time and keeping balances low, you can have the most significant impact on your score. Other factors like length of history and credit mix take time and cannot be rushed.
Another mistake is checking your score too frequently and worrying about small fluctuations. Scores can vary slightly from month to month due to updates in your credit report, but these changes are usually not significant. Focus on the long-term trends.
How to See What Affects Your Score
To understand what is affecting your score, review your credit reports from the three major bureaus: Equifax, Experian, and TransUnion. Look for errors, such as accounts that are not yours or late payments that were actually on time. If you find errors, you can dispute them with the credit bureau. The Fair Credit Reporting Act (FCRA) gives you the right to dispute inaccurate information, and the bureau must investigate within 30 days.
You can also use credit monitoring services that provide your score and explain the factors affecting it. Many credit card issuers offer free FICO or VantageScore scores, along with a breakdown of which factors are helping or hurting your score.
The Bottom Line on Credit Score Factors
Your credit score is determined by five main factors: payment history, amounts owed, length of credit history, new credit, and credit mix. Payment history and utilization are the most heavily weighted and are within your control. The other factors build over time. Avoid common myths that lead to counterproductive actions. By making on-time payments and keeping balances low, you can maintain a good credit score.
Remember, credit scores are not static. They change as new information is reported. Regularly reviewing your credit reports and understanding the factors can help you make informed decisions.
Common questions
Does checking my credit score lower it?
No. Checking your own credit score or report is a soft inquiry and does not affect your score. Only hard inquiries, which occur when a lender checks your credit for an application, can slightly lower your score.
Will closing a credit card hurt my credit score?
Yes, it can. Closing a credit card reduces your total available credit, which may increase your credit utilization ratio and lower your score. It can also shorten your average account age if the account is old.
Should I carry a balance on my credit card to build credit?
No. Carrying a balance does not help your credit score. What matters is your credit utilization ratio, which is based on your balance relative to your credit limit. Paying your balance in full each month keeps utilization low and avoids interest.
What is the most important factor in my credit score?
Payment history is the most heavily weighted factor, accounting for about 35% of your FICO score and 40% of your VantageScore. Making on-time payments is the most effective way to maintain a good score.
How long do late payments stay on my credit report?
Late payments can stay on your credit report for seven years. Bankruptcies can stay for up to ten years. The impact of a late payment lessens over time as it ages.
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