Secrets to Perfect Credit Score Start Here Now
Factors That Influence Your Credit Score
Your credit score is determined by several key factors, each playing a critical role in the overall calculation. Understanding these factors can help you take actionable steps to improve your score:
1. **Payment History**: Your track record of paying bills on time is the most significant factor, accounting for 35% of your score2. Late payments can severely impact your score, so prioritize punctuality.
2. **Credit Utilization**: This refers to the ratio of your credit card balances to your credit limits. Ideally, you should aim to keep this ratio below 30% to positively influence your score3.
3. **Length of Credit History**: The longer your credit history, the better. This factor accounts for 15% of your score, rewarding those with well-established credit accounts4.
4. **New Credit Inquiries**: Opening new credit accounts can temporarily lower your score, as it accounts for 10% of the total. Be strategic about applying for new credit.
5. **Credit Mix**: A diverse mix of credit types, such as revolving credit (credit cards) and installment loans (mortgages, auto loans), can positively impact your score, making up 10% of it5.