5 Factors that Impact Your Credit Scores

  • Payment History contributes 35%, so be sure to pay your bills on time!  Just 1 new late payment or collection could lower your credit scores 60 to 100 points.
  • Credit Utilization (balances on credit cards, line of credit, etc) contributes 30%. It’s best to maintain $0 balances and the creditor will still report a good payment history. Just make sure to use the card to make a small purchase every 4-6 months to keep the card active.
  • Average Age of your credit files contribute 15% toward the credit scores.  As your active credit files “age”, your credit scores will grow.  Keep credit cards with a good payment history open as long as possible.
  • Mix of Credit contributes 10% toward the credit scores. The credit scores prefer a few credit cards reporting along with an installment loan (such as an auto or student loan) and a mortgage loan.  It’s not necessary to have a mortgage loan to have good credit scores.
  • Hard Credit Inquiries impact the credit score by 10%. Hard inquiries occur when you actually apply for credit. Checking your scores online is a “soft” inquiry and does not impact the credit score. A hard inquiry can remain on your credit report for two years; however, inquiries over the last 90 days have the biggest impact on your scores.