What Makes Up Your Credit Score?
3 Min. Read
Understanding how your credit score is calculated can help you take control of your financial future. Credit scores are based on five core factors: payment history, amount owed, length of credit history, new credit, and credit mix. In this article, we’ll explain how each factor impacts your score, what lenders look for, and what you can do to boost your credit over time.
What Makes Up Your Credit Score?
Let’s break down exactly what affects your credit, the role these factors play in your credit report, and the steps you can take to improve your credit score.
| Factor Affecting Your Credit | Percentage of Your Score | What It Is | How To Improve It |
| Payment History | 35% | This factor looks at whether you’ve paid your bills on time and the frequency and severity of any late payments. | Pay all your bills on time. Set up reminders or automatic payments to avoid missing due dates. |
| Amount Owed | 30% | This factor considers how much you owe on each of your open credit accounts and the percentage of your credit limits you’re using (credit utilization ratio). | Keep your credit utilization ratio low by paying down balances and avoiding maxing out your credit limits. Aim to use less than 30% of your available credit. |
| Length of Credit History | 15% | This factor looks at how long you’ve had each of your credit accounts and the average age of your accounts. | Maintain older accounts to lengthen your credit history. Avoid closing old credit accounts unless necessary. |
| New Credit | 10% | This factor considers how many new credit accounts you’ve opened recently and the number of recent credit inquiries. | Limit the number of new credit accounts you open. Space out credit applications to reduce the impact on your score. Monitor your credit report for any unauthorized inquiries. |
| Credit Mix | 10% | This factor examines the variety of credit accounts you have, including credit cards, mortgages, auto loans, and installment loans. | Aim to have a mix of different types of credit accounts. Manage each type responsibly to demonstrate your ability to handle various forms of credit. |
When it comes to your credit history, it’s important to note that your most recent activity factors heavily into your creditworthiness. Here’s the approximate weight given to your credit activity for each year:
10% = 37+ months
40% = Past 12 months
30% = 13 – 24 months
20% = 25 – 36 months
Factors That Don’t Affect Your Credit Score
There are a lot of things that influence your credit, but it might be a relief to know there are a few things that don’t play a role. Here are a few factors that don’t affect the strength of your credit score:
Income. The amount of money you make may be a deciding factor in loan amounts or credit limits, but your income isn’t used to calculate your credit score.
Age. Your age doesn’t affect your credit score. However, it takes time to build your credit history, so it’s common for young people with less credit experience to have lower scores.
Employment. Your employment status doesn’t affect your score, and you don’t need to be employed for a certain period of time to build credit or get approved for a loan.
Residence. Where you live, how long you have lived in a certain residence, or whether you own a property doesn’t affect your score.
Marital status. Whether or not you’re married doesn’t influence your credit score, and your spouse’s score doesn’t influence your own. However, if you apply for a loan together, the lender will assess both of your scores, and one poor score will count against both of you.
Criminal record and personal information. Any criminal records or personal information will not be used to calculate your credit score.
Checking your own credit. Personal credit checks are considered soft inquiries and do not affect your credit score.
Wondering which habits could drag your credit score down? Read our article What Hurts Your Credit Score to learn how to steer clear of common mistakes.
Start Your Path to a Stronger Score
Your credit score isn’t set in stone—it’s something you can build and improve over time. If you focus on the factors that matter most, you’ll be on the path to a stronger score and greater financial freedom. Remember, even small changes in your habits can make a big difference in your financial future.
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Jennifer Tucker
Jennifer Tucker is a freelance writer for Marine Credit Union. She has held roles in banking, marketing, and public relations during her 15+ year career. She holds a bachelor’s degree in communication with a minor in journalism from the University of Portland and a master’s degree in communication from Marquette University.
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