How is a credit score calculated?

Five factors make-up your credit score. These are 1) Payment history, 2) Amounts owed, 3) Length of credit history, 4) Types of credit, and 5) New credit. Let’s explore how these different factors impact your credit score:



  • Payment history (35%): Payment history makes up 35% of your credit score and is an overview of the payments you have made or missed to this account. Making your payments on or before the due date will help you have a much higher score than someone who does not make their payments on-time.
  • Amounts owed (30%): This is the overall amount of debt that you currently owe across all accounts reported to the credit bureaus.  Keeping your account balances low or less than 30% of your credit limit may help you  have a higher credit score. 
  • Length of credit history (15%): Length of credit history is an indicator of how long you have had an active line of credit and makes up 15% of your credit score. Keeping your accounts open and active for at least a year will help you have a healthier credit score.
  • Types of credit (10%): Types of credit shows the different types of credit you have and makes up 10% of your score. Responsibly managing a mix of different types of credit may make a lender view you as a more desirable customer because you are able to responsibly manage different types of accounts.
  • New credit (10%): New credit showcases how often you apply for new credit and makes up 10% of your score. Limit the amount of times you apply for new credit to only when you need to apply for a new account

Overall, there are various factors that go into calculating a credit score. The factor that has the biggest impact on your credit score is establishing an on-time repayment history. Even so, you’ll always want to keep the other factors in mind and have a holistic view of building your credit score.

Wondering how to build your credit? Visit our following article to learn more: How do I build credit if my credit application was denied?

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