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Understanding the Factors That Affect Your Credit Score

Your credit score is influenced by several factors, including:

  1. Payment history: 35% of your credit score is determined by how consistently you pay your debts on time, such as credit card bills, car payments, or phone bills.

  2. Credit utilization: 30% of your score is based on how much of your available credit you use. Having a low percentage of available credit shows that you're a responsible borrower who doesn't max out credit cards.

  3. Length of credit history: 15% of your score is calculated based on how long you've had an established credit profile. The longer your credit history, the better your score.

  4. Credit mix: 10% of your score takes into consideration the various types of accounts you have. It's best to have a combination of installment loans (like a car loan or student loan) and revolving loans (like a credit card).

  5. Recent activity: 10% of your score is impacted by how recently you've opened new lines of credit. If you're applying for a mortgage, avoid taking out new credit cards or loans.


What is Considered a Good Credit Score?

FICO credit scores range from 300-850, with most consumers having scores between 600 and 750. Good credit is considered anything 670 or above:

  • 300-579: Poor

  • 580-669: Fair

  • 670-739: Good

  • 740-799: Very Good

  • 800-850: Exceptional

Why Does Credit Score Matter?

Having a healthy credit score not only helps you qualify for a loan, but it also secures a better interest rate, saving you hundreds or thousands of dollars over the loan's life.

What Does Credit Score Impact?


Your credit score impacts the interest rate you pay to borrow money for various financial products, including home loans, auto loans, credit lines, and credit cards. However, it doesn't affect any fees or other charges associated with taking out a loan, such as home inspections or closing costs.


Additionally, your credit score can affect your qualification for rental applications and insurance for your home.

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