The 5 Important Factors That Affect Your Credit Score

By Credit Repair

December 16, 2019   •   Fact checked by Dumb Little Man

factors that affect your credit score

A credit score is more than a three-digit number. It not only determines your ability to pay back loans but also set interest rates you pay for credit cards and loans. Landlords, employers, utility companies, and insurance companies look at it to determine your financial responsibility and capability.

Because of that, protecting and improving your credit score is downright essential. You can start by familiarizing yourself with the factors that affect your credit score.

Bill Payment History

factor that affect your credit score

Did you know that payment history makes up 35% of your credit score?

Simply put, how timely you pay off your bills determines your credit score more than any other factor. It also means that late payment, bankruptcy, tax liens, charge-offs or foreclosures can hurt your credit score.

Lenders report your payment activity, both good and bad, to the major credit bureaus every 30 days. Missing on a payment or any bills can negatively affect your credit score, including student loans, car loans, mortgage loans, and credit card bills. Other payments such as utilities or phone bills are not counted until multiple late payments lead the provider to turn your debt over to collections.

It goes without saying that you should pay your bills on time.

Amount of Debt

Your debt level determines 30% of your credit score.

Also known as credit utilization ration, debt is calculated based on your credit limit, as well as how much of the credit you have used.

For example, you have no loans and your single credit card has a $200 balance and a $1,000 credit limit, your credit utilization ratio will be 20%. An ideal credit utilization ratio is 30% or less, but it would be better if you keep it at or under 10%.

Having a large debt makes you a high-risk borrower, eventually risking your loan approval. Luckily, your credit score can be improved as you start paying off your debt.

See Also: Staying Out Of Debt: 3 Money Habits You Should Be Doing

The Length of Credit History

Your credit history determines 15% of your credit score. The average age of all your accounts is taken into account if you have multiple accounts.

An older credit account benefits your credit score as it shows that you are experienced in handling credit. Opening new accounts or closing your old accounts can minimize your average credit age.

Short credit history can be fine too as long as you make timely payment and don’t have much debt. You should leave your credit card accounts open, even if they are not used frequently or anymore.

The Number of Credit Inquiries

factors affecting your credit score

Inquiries account for 10% of your credit score.

Each time you apply for a credit check, an inquiry is included in your credit report showing that you have applied for a credit-based application. One or two inquiries won’t affect your score. But multiple inquiries made within a short period can deduct your credit points.

Therefore, try to minimize your credit check applications to protect your credit score. Luckily, inquiries made within the last 12 months account for your credit score. Inquiries are removed from your credit report after 24 months.

Hard Inquiries

Hard inquiries are placed in your credit file each time a lender asks for your credit report to determine your credibility. Also known as hard pulls, these inquiries can hurt your credit score.


For example, if you have opened multiple accounts recently and the percentage of these accounts is larger compared to the total number, you are considered as a high-risk borrower. It gives a message to the lender that you might be experiencing cash flow problems or looking for new debt.

So you must have understood the factors that affect your credit score. Make sure to check your credit report, pay on time, and make fewer inquiries to boost your credit score.

Credit Repair

Nicholas Houston is a finance expert and founder of CreditAidUsa. CreditAidUsa is the leading credit repair service in the country. He has years of experience in credit repair and tax preparation.

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