The Five Factors That Make Up Your Credit Score
Your credit score is a three-digit number built from five specific pieces of information in your credit report. The most widely used score is the FICO score, which ranges from 300 to 850. Each of the five factors carries a different weight—some matter much more than others.
The five factors are: payment history (35%), amounts you owe (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%). These percentages tell you where to focus if you want to improve your score. Missing a payment hurts more than opening a new credit card, for example.
Key Takeaways
- Payment history makes up 35% of your score, so a single late payment can lower it by dozens of points and stays on your report for seven years.
- The amount you owe relative to your credit limits (called utilization) counts for 30%, and keeping it below 30% of your available credit helps your score.
- How long you have held credit accounts matters for 15%, which is why closing old accounts can sometimes hurt your score even if you pay on time.
- Having different types of credit—a mix of credit cards, a car loan, and a mortgage—adds 10% to your score, but only if you manage them all.
- Each time you explore for new credit, a hard inquiry appears on your report and lowers your score slightly for about three months.
Payment History: The Largest Factor at 35%
Payment history is whether you pay your bills on time, and it is the single biggest piece of your credit score. This includes credit cards, car loans, mortgages, student loans, and any other debt that reports to the credit bureaus. One late payment—even 30 days late—can drop your score by 100 points or more, depending on how high it was to start.
Late payments stay on your credit report for seven years from the date you missed the payment. After seven years, they fall off automatically. A payment that is 60 or 90 days late damages your score more than one that is 30 days late. Payments that go to collections or result in a judgment stay even longer and hurt more severely.
If you have missed payments in the past, the damage fades over time. A late payment from five years ago hurts less than one from last month. This is why people with older negative marks can still rebuild their scores by paying on time going forward.
Credit Utilization: How Much You Owe Relative to Your Limits
Credit utilization is the percentage of your available credit that you are currently using. If you have a credit card with a $5,000 limit and a $1,500 balance, your utilization on that card is 30%. This factor counts for 30% of your score, making it the second most important.
The general rule is to keep utilization below 30% across all your cards combined. If you have three cards with $5,000 limits each (total available credit of $15,000) and you owe $4,000 total, your utilization is about 27%—which is good. Utilization above 50% signals to lenders that you are relying heavily on credit and may be a higher risk.
Utilization can change month to month as you pay down balances and make new charges. Unlike payment history, it does not have a memory—if you pay your balance down this month, your score can improve next month. This makes it one of the faster factors to improve if you have the cash to pay down debt.
Length of Credit History: 15% of Your Score
The length of your credit history is how long you have held credit accounts. This includes the age of your oldest account, the age of your newest account, and the average age of all your accounts. Longer history is better, which is why closing old accounts can sometimes lower your score even if you have paid them off.
If you are young or new to credit, you will have a shorter history, and that is normal. You cannot rush this factor—it improves automatically as time passes. Someone with 20 years of credit history will always score higher on this factor than someone with 2 years, all else equal.
This is why financial advisors often recommend keeping old credit cards open even after you pay them off. An old card with a zero balance helps your average account age and does not hurt your utilization. The main exception is if the card charges an annual fee you cannot avoid.
Credit Mix: Having Different Types of Credit
Credit mix means having different kinds of credit accounts—credit cards, car loans, mortgages, student loans, and so on. This factor counts for 10% of your score. Lenders want to see that you can manage multiple types of debt responsibly.
You do not need to have every type of credit to have a good score. If you have a credit card and a car loan, that is a reasonable mix. If you only have credit cards and no installment loans, your mix is narrower but not disqualifying. Credit mix matters less than payment history or utilization, so do not take on debt you do not need just to improve this factor.
New Credit Inquiries: The Smallest Factor at 10%
When you explore for a credit card, car loan, or mortgage, the lender checks your credit report. This is called a hard inquiry and it appears on your report and lowers your score slightly—usually by 5 to 10 points. The impact is temporary; the inquiry stops affecting your score after about three months and falls off your report after two years.
Multiple hard inquiries in a short time can add up. If you explore for three credit cards in one month, you will see three inquiries. However, if you are shopping for a mortgage or car loan, most scoring models treat multiple inquiries for the same type of loan within 14 to 45 days as a single inquiry. This protects you from being penalized for rate shopping.
Checking your own credit report does not create a hard inquiry and does not lower your score. This is called a soft inquiry and does not appear to lenders. You can check your own credit as often as you want without any penalty.
Where Your Credit Score Comes From
Your credit score is calculated by three major credit bureaus: Equifax, Experian, and TransUnion. Each bureau maintains a separate credit report based on information reported by lenders, creditors, and collection agencies. Because each bureau may have slightly different information, your score can vary between them.
FICO is the most common scoring model, but Vantage Score is another widely used model. Both use the same five factors but weight them slightly differently. Some lenders use industry-specific scores for mortgages, auto loans, or credit cards. These specialized scores may weight factors differently than a general FICO score.
You can view your credit reports for free once per year from each bureau at annualcreditreport.com, which is the official government site. You can also purchase your FICO score directly from FICO or view free score estimates from many credit card companies and financial websites. These free estimates are usually close to your actual FICO score but may not be exact.
Frequently Asked Questions
How long does it take to build a credit score from scratch?
You need at least one account reporting to the credit bureaus for six months before a score is calculated. Most people see a score within three to six months of opening their first credit account. Building a strong score takes longer—typically one to two years of on-time payments and low utilization.
Can paying off debt hurt my credit score?
Paying off a balance lowers your utilization, which helps your score. However, if you pay off an account completely and close it, you lose that account's history and available credit, which can lower your score temporarily. Paying down balances while keeping accounts open is the best approach.
Does my income affect my credit score?
No. Your income does not appear on your credit report and does not factor into your score. Lenders may ask about your income when you explore for a loan, but it is separate from your credit score calculation.
How much does a hard inquiry lower my score?
A single hard inquiry typically lowers your score by 5 to 10 points. The impact is small and temporary. Multiple inquiries in a short time add up, but the damage fades after three months and disappears from your report after two years.
What is a good credit score?
Scores above 670 are generally considered good, and scores above 740 are very good. Scores above 800 are excellent. However, what lenders consider "good enough" varies by loan type—mortgage lenders may require 620 or higher, while credit card issuers may want 700 or higher.