Whether you’re rebuilding your credit or simply want to understand how credit works, knowing the factors that affect your credit score is a great place to start. Equally important is understanding what doesn’t affect your credit score—so you can focus on what really matters.
Before exploring these factors, let’s look at the most common credit scoring models and how they differ.
Understanding credit scoring models
The three most widely used scoring models are FICO, VantageScore 3.0, and VantageScore 4.0. Each one weighs certain factors differently when calculating your score.
FICO Credit Score Model
- 35% Payment history
- 30% Amounts owed
- 15% Length of credit history
- 10% Types of credit (credit mix)
- 10% New credit inquiries
VantageScore 3.0 Credit Score Model
- 40% Payment history
- 21% Age and type of credit
- 20% Credit utilization
- 11% Total balances/debt
- 5% Recent credit behaviors and inquiries
- 3% Available credit
VantageScore 4.0 Credit Score Model
- Extremely influential: Total credit usage, balance, and available credit
- Highly influential: Credit mix and experience
- Moderately influential: Payment history
- Less influential: Age of credit history
- Less influential: New accounts
Each scoring model may yield slightly different numbers for the same borrower. That’s normal and expected. Credit-scoring models are updated periodically, so exact weightings can vary.
Key factors that affect your credit score
1. Payment history
Your payment history shows lenders whether you’re a reliable borrower. Making on-time payments consistently is one of the strongest ways to build and maintain good credit.
Negative impacts include:
- Late or missed payments
- Accounts sent to collections
- Bankruptcies, foreclosures, or settlements
Remember: Time can lessen the impact of past mistakes. Consistent on-time payments will improve your score over time.
2. Amounts owed (credit utilization)
Your credit utilization ratio measures how much credit you’re using compared to your total available limit. Lenders view lower utilization as a sign of responsible credit use.
Example:
If you have a total limit of $15,000 and balances of $5,000, your utilization is 33%.
Pro tip: Aim to keep your utilization under 30%. The lower, the better.
3. Length of credit history
The longer you’ve responsibly managed credit, the better. Your credit history helps lenders assess your experience with borrowing and repayment.
Best practices:
- Keep old accounts open when possible to preserve your credit age.
- Avoid opening multiple new accounts in a short period.
4. Mix of credit
A healthy credit mix can show lenders you can handle different types of credit. This includes credit cards, installment loans, mortgages, and retail accounts. However, don’t open new accounts solely to diversify your credit. Only borrow when necessary.
5. New credit inquiries
When you apply for a new loan or credit card, the lender performs a hard inquiry. A single inquiry has a small, temporary effect on your score, but several inquiries in a short time may suggest financial strain.
Tip: Pre-qualification offers that state “no impact to your credit score” use a soft inquiry instead of a hard one.
Factors that don’t affect your credit score
Knowing what doesn’t affect your credit can help you focus on the right financial habits.
- Checking your own credit report: Viewing your credit reports or scores results in a soft inquiry and won’t affect your score.
- Using a debit card: Debit and savings accounts aren’t included in credit reports. They don’t help—or hurt—your credit.
- Being denied credit: Some lenders, including Best Egg, only perform a hard inquiry if you accept the offer, not when you apply. Keep in mind, not all lenders operate this way.
- Income level: Your salary or income doesn’t influence your credit score directly, though it may affect your ability to pay bills on time.
- Payments under 30 days late: Late payments under 30 days past due aren’t reported to credit bureaus.
- Getting married: Marriage doesn’t combine credit histories. Each person maintains their own credit file.
Additional tips for improving your credit
Building and maintaining a strong credit score takes consistency and time. Here’s how to make steady progress:
- Pay all bills on time.
- Keep your credit utilization below 30%.
- Review your credit reports regularly for errors.
- Avoid closing old accounts unnecessarily.
- Limit new credit applications.
Over time, these positive habits can help improve your credit standing and financial confidence.
This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.
