Credit scores are influenced by many factors. These include whether you pay your bills on time, and how long you have used credit. Knowing what factors impact credit scores will help you plan how to build or protect your credit.

Credit scoring companies use data from credit reports to calculate your scores. Although they won’t divulge their exact formulas they will share the basics of how they calculate scores.

Why should you care? Your credit is often the key to many other areas of your life, including whether you can obtain a credit card, car loan or mortgage at what interest rate or whether you can purchase a home.

You can rent any apartment you like, regardless of how much you spend on auto insurance or utility deposits.

Credit scores Affected factors


Although the approaches of the two largest scoring companies in America, FICO & VantageScore differ, they all agree on the most important factors. Your credit scores are more than half made up of payment history and credit usage. This is the amount of credit you actually use. Keep an eye out for the rest.

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Here is a list of all factors that can affect your score:

  • History of Payments

Credit reports will reveal your payment history or whether you have paid all of your obligations on time. FICO claims that payment history is responsible for 35% to your score. VantageScore does not give percentages but calls payment history “extremely important.”

You must pay all bills on time. Late payments of 30 days or more could result in your score being lower. The longer you wait, the more damage you will suffer. To avoid missing due dates, set up calendar reminders or autopay so that you don’t forget. It might be a good idea to request creditors to change your due dates to better match when you get paid.

Credit utilization

Credit utilization is the percentage of your credit limit that you use. FICO claims that the credit limit you have available is 30% of your score. VantageScore considers credit utilization to be “highly influential.”

What to do: Experts suggest that not exceed 30% of your credit. The highest score people tend to use less credit than those with lower scores. You can set balance alerts and make extra payments throughout the month to keep your credit utilization low.

Good news is that credit utilization and score damage can be reversed. The creditor must report the high credit utilization to credit bureaus. Once the balance is paid down, the damage disappears.

You should also be aware of other credit score factors

Once you have mastered the art of paying on time and keeping your credit utilization low, it’s time to focus on other credit factors. They can also impact your score, but not as significantly.

Credit Card Age:  The longer the better. Keep old accounts open, unless you have compelling reasons to close them. For example, a fee for an annual card that you don’t use anymore. This category might help you a bit. You could become an authorized user on an account that has a great payment history.

You have the types of credit that you have or credit mix. It is best to have both installment accounts (those with equal payments such as mortgages or car payments) and credit card accounts.

  • Your credit history: Every application that results in a hard inquiry may affect your score.

Total balances and Debt: It’s better if you are making progress in paying down your debt.

Factors that Not Affect Your Credit Score

Your score can be checked by you bank or free credit score services. This is because your score is a soft pull on credit. It doesn’t have to be done every time you check your score.

Your rent and utility payments do not count towards your credit score in most cases. Only exceptions are if you use a Rent-Reporting Service, or if your utility payments are not on time. It could be charged off by the utility company or sold to a collector who can report it back to credit bureaus. This could affect your credit score. Experian Boost is a new product that allows you to add utility payment information into your Experian credit file. This can impact your credit score.

Income and bank balances. Credit reports may include information about your employer, but this is used to match account data with the right person. Your score won’t go up if you get a raise. Your score won’t be affected by your credit account balances, which are not saved, checking, or investment accounts.

Credit scoring companies examine your credit reports to determine how you are doing on each of these factors. They then calculate your score based on that information. Check your credit reports to see the exact same results.

Your credit-building efforts should be focused on making on-time payments and keeping your balances below your credit limit. These factors will have the greatest impact on your score. Halo home‘s free credit score dashboard allows you to track your score and receive personalized tips.