The 5 Factors That Impact Your Credit Score (And How to Improve Each One!)

Why Your Credit Score Matters

Your credit score is more than just a number—it’s a major factor in your financial health. Whether you’re applying for a mortgage, securing a car loan, or even getting approved for an apartment, lenders use your credit score to assess your financial responsibility. A higher score means better interest rates, higher credit limits, and greater financial opportunities.

If you want to build or maintain a strong credit score, you need to understand the five key factors that affect it. These factors determine how lenders see you and what financial doors will open for you.

In this post, we’ll break down:

✅ What makes up your credit score
✅ How each factor impacts your score
✅ Practical steps to improve your credit health

Let’s dive in!

1️⃣ Payment History (35%) – Are You Paying on Time?

Your payment history is the biggest factor in determining your credit score. Lenders want to know if you pay your bills on time, every time. Late payments, missed payments, and accounts in collections can significantly hurt your score.

How to Improve Your Payment History:

✔ Set Up Automatic Payments – Schedule autopay for your credit cards, loans, and other bills to avoid late payments.
✔ Use Payment Reminders – If autopay isn’t an option, set calendar reminders a few days before the due date.
✔ Catch Up on Late Payments – If you’ve missed a payment, pay it as soon as possible. The longer it goes unpaid, the worse the impact.
✔ Request a Goodwill Adjustment – If you’ve been a responsible borrower but had a one-time late payment, ask the creditor to remove the late mark.

💡 Pro Tip: Even one late payment can drop your score significantly, so prioritize on-time payments to keep your score healthy.

2️⃣ Credit Utilization (30%) – How Much of Your Available Credit Are You Using?

Credit utilization is the second most important factor in your score. It measures how much of your available credit you’re using. A lower utilization rate shows lenders that you’re managing credit responsibly.

How to Improve Your Credit Utilization:

✔ Keep Credit Usage Below 30% – If you have a $10,000 credit limit, try to keep your balance below $3,000.
✔ Pay Off Balances Before the Statement Date – This can help lower your reported balance.
✔ Request a Credit Limit Increase – A higher credit limit can lower your utilization percentage. Just make sure not to increase spending!
✔ Pay Down Debt Strategically – Focus on paying down high balances first to free up available credit.

💡 Pro Tip: The lower your credit utilization, the better.

3️⃣ Length of Credit History (15%) – How Long Have You Had Credit Accounts?

Your credit age is determined by the average age of all your credit accounts. The longer your history, the more reliable you appear to lenders.

How to Improve Your Credit Age:

✔ Keep Old Accounts Open – Even if you’re not using an old credit card, keep it open to maintain your credit history.
✔ Be Mindful When Opening New Accounts – Too many new accounts can lower your average credit age.
✔ Consider Becoming an Authorized User – If a trusted family member has an old credit card with a good history, being added as an authorized user can help extend your credit age.

💡 Pro Tip: If you must close a credit card, choose one that’s newer rather than an older one to maintain your credit length.

4️⃣ Credit Mix (10%) – Do You Have a Mix of Loans and Credit Cards?

Lenders like to see a mix of different types of credit accounts, such as credit cards, auto loans, student loans, and mortgages. This demonstrates that you can handle various types of credit responsibly.

How to Improve Your Credit Mix:

✔ Only Open Accounts When Necessary – Don’t take out a loan just for the sake of having one.
✔ Consider a Small Credit-Building Loan – If you only have credit cards, a small personal loan or credit-builder loan could help diversify your credit profile.
✔ Use Revolving and Installment Credit – A healthy mix includes both credit cards (revolving credit) and installment loans (like a car loan or mortgage).

💡 Pro Tip: While having a variety of credit types is beneficial, only open new accounts when it makes sense for your financial goals.

5️⃣ New Credit/Inquiries (10%) – Have You Applied for Too Much Credit Recently?

Every time you apply for a new credit account, a hard inquiry appears on your credit report. Too many inquiries in a short period can signal risk to lenders.

How to Reduce the Impact of Credit Inquiries:

✔ Apply for Credit Only When Needed – Be selective about applying for new credit cards or loans.
✔ Rate Shop Within a Short Time Frame – If you’re applying for a mortgage or auto loan, multiple inquiries in a short period (typically 14-45 days) are counted as one inquiry.
✔ Check Pre-Qualification Offers – Some lenders allow you to check for approval without a hard inquiry.
✔ Monitor Your Credit Report – Keep an eye on your report for unauthorized inquiries and dispute any that look suspicious.

💡 Pro Tip: One or two inquiries won’t drastically hurt your score, but multiple hard inquiries can lower it, so plan applications wisely.

Final Thoughts: Take Control of Your Credit Score

Understanding the factors that influence your credit score is the first step to taking control of your financial future. By focusing on:

✔ On-time payments
✔ Low credit utilization
✔ A long credit history
✔ A healthy credit mix
✔ Limited credit inquiries

…you can build and maintain a strong credit score that unlocks financial opportunities.

🎯 Next Steps:

✅ Check your credit score today and identify areas for improvement.
✅ Set up automatic bill payments to never miss a due date.
✅ Lower your credit utilization by paying down balances.
✅ Monitor your credit report for errors and fraud.

👉 Need more guidance? Join RTF Women’s Personal Finance Club for expert insights on credit, budgeting, and financial empowerment.