At a Glance

Every time a person contacts a lender to take out some form of debt or credit, whether it be something as simple as a credit card or as complex as a mortgage, that person’s credit score will be evaluated. Rated on a scale of 300 through 850, this score is determined by the credit bureaus and is used as a primary metric by lenders for whether or not a person qualifies for a loan, credit card, or other items. Understanding what affects your credit score can help anybody start taking steps to improve their score over time.

In this article, you’ll learn:

Factors affecting credit scores

A credit score is not just a magically assigned number that a person receives. Instead, it is calculated by the three credit bureaus using data based on a consumer’s history with credit and debt in general. The five factors of credit score are as follows:

1. Payment history

When considering factors that affect credit scores, payment history is one of the most important. Being exactly what it sounds like, your payment history on previous debt or credit accounts will be taken into consideration when your score is determined.

How to improve your payment history?

The easiest way to improve your payment history is to make all payments on time and in full when they are due. If it’s easier, make multiple payments during the course of the month when you have the money on hand to pay back.

2. Credit utilization

Credit utilization refers to the total amount of credit you have outstanding when a billing cycle is completed. For example, a person with access to $10,000 in credit who has borrowed $5,000 when the billing cycle hits will have a credit utilization of 50% for that period of time. Generally, the lower the credit utilization a person has, the better the score.

How to lower credit utilization ratio?

The best way to lower your credit utilization ratio is to borrow less money for your day-to-day purchases. Consider using your basic debit card for some purchases instead of credit if you have the funds. Alternatively, make a payment on your credit halfway through the billing cycle to reduce the amount outstanding when your billing statement hits.

3. Length of credit history

Another major factor in determining a person’s credit score is the length of their credit history. This refers to the absolute oldest account a person has which is still active. The longer a person’s history with credit, the better a credit score. This is why many experts recommend never closing your first ever credit card or other type of credit account.

4. Credit mix

In looking at what makes up a credit score, a person’s credit mix is one of the major credit score factors. This refers to the types of accounts that a person has, with having a solid mix of different types being viewed as better. For example, a person who only has credit cards only has a credit mix of revolving lines, whereas a person with a credit card and a mortgage also has a loan.

5. Credit inquiries

When considering the 5 factors that affect a credit score, credit inquiries also impact your score. This refers to the number of hard inquiries into your credit that have occurred in recent history. A hard inquiry occurs when a lender request a full credit report for you from the credit bureaus, typically occurring during the loan or credit card application process.

Learn more: Do Credit Inquiries Affect Your Credit Score?

Which factor affects credit score the most?

What impacts your credit score the most is your payment history. This factor is 35% of your total score, making it the most heavily weighted. Given this reason, it’s best to make every payment on time so that you don’t become overwhelmed and miss a payment.

Factors that don’t affect credit scores

When considering what factors affect credit score, there are a number of factors that actually don’t impact your score in any way. The most common of these include:

  • Having high-interest rates on your accounts
  • Having a credit application denied in the past
  • Getting married or divorced
  • A drop in your gross or net salary
  • Choosing to pay with a debit card
  • Seeking advice from a credit counselor

Learn more: 15 Things That Have No Impact on Your Credit Score

What can hurt your credit score?

On the other side of that coin, the factors of credit score which will negatively impact you include:

  • Consistently missing payments on your debt
  • Defaulting on a loan
  • Having a high debt-to-credit utilization ratio
  • Applying for a large number of loans at a single time
  • Going through bankruptcy
  • Maxing out a credit card

How to improve your credit score?

Improving a credit score will take a large amount of time and dedication, but it is certainly possible to recover a score that has fallen significantly. Focus on addressing the factors affecting your credit score outlined above when trying to bolster your score. This means making all payments on time and in full, as well as paying off any outstanding late payments you have. Borrow less money on your credit cards, and stop all applications for new credit. When you are in a strong enough financial standpoint, consider taking out an auto loan or mortgage to bolster your credit mix.

Learn more: How to Improve Your Credit Score?


Yes, the same credit factors are used for credit score calculation regardless of what organization is performing the calculation, in most cases.

While looking at what factors determine your credit score, utility bill payments often will not hurt or help your score. However, if you report your payments to the credit bureaus then they may take them into account when evaluating your score.

Related: Do Utility Bills Build Credit?

No, if you have no history of credit whatsoever then you will not have a credit score assigned to yourself.

No, soft inquiries will not affect your credit score, however, a hard inquiry will likely result in a few point drops that will go back up after a couple of months.

The best way to start seeing results on your credit score is to begin making payments on time and in full while reducing the total amount of debt you take out on a monthly basis.