Hello! Today, I’ve partnered with Lexington Law to share clear information about the factors that go into your credit score.
Have you ever wondered what influences your credit score and how much control you actually have over it?
You have more control over your credit score than you might think.
Understanding credit scores matters because they can affect many parts of your life. You don’t need to obsess over every point, but learning how scores are calculated can help you make smarter financial choices.
Your credit score can influence the interest rate you receive on a loan, your ability to buy a home, qualify for a rental, secure certain jobs, and even your insurance premiums.
Although credit scores can have a big impact, improving your score is often achievable with consistent, deliberate steps.
Because of that, a credit score can be an asset when you know how to manage it.
Below is a clear breakdown of the main factors that determine your credit score so you can identify where to focus your efforts and improve your financial standing.
What factors determine a person’s credit score?
Credit scores are made up of five primary components. Here’s a concise explanation of each:
- 35% Payment History — Payment history has the largest impact on your score. This reflects whether you pay bills on time, any missed payments, accounts sent to collections, and similar payment-related issues.
- 30% Amounts Owed — The balances you carry and your credit utilization rate fall into this category. For example, if your credit card limit is $1,000, keeping the balance below $200 (20% utilization) generally looks better to lenders than maxing out the card.
- 15% Length of Credit History — The age of your accounts matters. Older accounts raise your average account age, which can help your score. If you have a long-standing card with no rewards, keeping it open can still benefit your score, provided you won’t be tempted into debt.
- 10% Credit Mix — This refers to the variety of credit accounts you have, such as credit cards, mortgages, auto loans, and student loans. A healthy mix can be beneficial, but it’s not necessary to take on new debt just to diversify.
- 10% New Credit — New credit covers recent account openings and hard inquiries. Multiple recent inquiries or newly opened accounts can temporarily lower your score. Checking your own credit with an authorized service does not count as a hard inquiry.
Knowing these factors shows you where to focus: pay bills on time, keep balances low relative to limits, maintain older accounts when sensible, avoid unnecessary new accounts, and manage the types of credit you hold.
If you’re considering professional assistance for credit repair, Lexington Law is one option some people use.
Lexington Law reports that, on average, clients see about 10.2 items—roughly 24% of negative remarks—removed from their credit reports within four months of working with them.
They offer several services that may help you review and improve your credit profile, including:
- Free personalized credit consultation
- Free access to your TransUnion report summary
- Free credit report review with recommended solutions
Lexington Law has assisted many people in disputing items such as accounts in collections, late payments, judgments, bankruptcies, and foreclosures, which can contribute to improving a credit score when inaccurate or disputable information is removed.
Which area of your credit score do you plan to work on first?