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What Are the 5 Factors That Affect a Credit Score?

Your credit score is a three-digit number that acts as a snapshot of your financial responsibility. It greatly impacts your ability to secure loans, get favorable interest rates, and even qualify for things like housing or employment.

However, it can often feel confusing and downright frustrating when it comes to figuring out how to calculate your score or what you can do to improve it. Fortunately, your credit score isn’t some mysterious formula—it’s based on five specific factors you can influence.

Read on to learn more about what affects your score and the steps you can take to strengthen your financial standing.

What Impacts Your Credit Score?

Five main factors affect credit scores. Each one contributes to your overall rating in different proportions and influences how lenders view your creditworthiness:

#1. Payment History (35%)

Payment history is the most influential factor in determining your credit score. It reflects whether you’ve made your credit payments on time. A consistent record of timely payments indicates reliability and positively affects your score. On the other hand, late payments, defaults, and bankruptcies can have a detrimental effect.


  • Set up automatic payments for recurring bills like credit cards, loans, or mortgage payments for at least the minimum amount due.
  • Keep track of payment due dates in a calendar.
  • Contact lenders immediately if you anticipate difficulty in making a payment.
  • Dispute errors on your credit report promptly to ensure accuracy.

#2. Amount Owed (30%)

This factor evaluates your debt amount compared to your credit limits. It is called your credit utilization ratio. Ideally, you should aim for a utilization ratio below 30%. Maxing out your credit cards can significantly damage your score. Carrying high debt burdens relative to your limits will also hurt your score.


  • Prioritize paying down high-interest debt first.
  • Resist the urge to max out your credit cards.
  • Consider requesting credit limit increases, as responsible credit use demonstrates trust.
  • Avoid closing unused credit cards, as it can increase your overall credit utilization ratio.

#3. Length of Credit History (15%)

A longer credit history provides more data for creditors to evaluate your financial behavior and can benefit your score. It considers the age of your oldest account, your newest account, and the average age of all your accounts.


  • Keep older credit accounts open, even if you’re not using them frequently.
  • Avoid opening several new accounts simultaneously, as this lowers your average account age.

#4. Credit Mix (10%)

Credit mix refers to your various credit accounts including credit cards, installment loans, finance company accounts, and mortgage loans. A diverse mix can positively impact your score, indicating you can handle different types of credit responsibly.


  • Consider a secured loan or credit card if you lack a credit history.
  • Manage both revolving credit (credit cards) and installment loans (car loans, mortgages) responsibly.

#5. New Credit (10%)

Opening several new credit accounts over a short period can indicate higher risk to lenders and potentially lower your score. This factor examines how many new accounts you have and the number of recent inquiries into your credit report.


  • Space out credit applications by several months.
  • Consider pre-qualified offers that don’t trigger hard inquiries on your credit report.

What Is a Good Credit Score?

Credit scores typically range from 300 to 850. Here’s a quick breakdown:

  • Below 670: Considered poor and can limit your access to favorable loan terms.
  • 670 – 739: Considered fair and allows access to some loans but at higher interest rates.
  • 740 – 799: Considered good and opens doors to better loan terms and interest rates.
  • 800+: Considered excellent and qualifies you for the most favorable loan terms and offers.

How to Get a Credit Report for Free

Every year, you’re entitled to one free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) through The Federal Trade Commission (FTC) recommends visiting the above website to obtain your report.

How to Check Your Credit Score

If you want to check your score, you should know it might not be included in your free annual credit report. However, many credit card companies and credit unions offer free credit score access to their customers.

Freedom Credit Union provides every member with their FICO score. This is a product offered through Online/Mobile banking and users must enroll to take advantage of this service.

You can also get your score directly from each of the credit bureaus.

Important note:

The three major credit reporting companies—Equifax, Experian, and TransUnion—may use different mathematical models to calculate your credit score. A model analyzes factors like payment history and utilization to predict default risk.

For example, the FICO score is one common model used by the credit bureaus. However, lenders may utilize other FICO versions or unique scoring models tailored to their lending criteria.

At Freedom Credit Union, our credit score product uses FICO Score 9, which is available to members via Online/Mobile banking.

While one version weighs certain factors like your credit mix more heavily, another may emphasize aspects like payment history or credit history length. This means your score can differ slightly depending on the specific model applied to your credit report data.

Personalized Help for a Better Credit Score

Understanding your credit score is key to unlocking financial opportunities and better controlling your finances. At Freedom Credit Union, we believe that everyone deserves the tools and knowledge to achieve their financial goals.

This is why we offer our members free financial counseling. Click the link below to learn more and schedule an appointment with one of our experts.

Get Free Financial Counseling