Understanding the 5 Factors That Make Up Your Credit Score

If you've ever applied for a loan, credit card, or even tried to refinance your auto loan, you've likely heard how important your credit score is. But do you actually know what goes into it?

Your credit score isn’t just a random number—it’s calculated using five key factors. Understanding these can help you improve your score, qualify for better rates, and save thousands over time.

Let’s break down each one.

1. Payment History (35%)

This is the most important part of your credit score. Lenders want to know: Do you pay your bills on time? Every late payment, charge-off, or collection ding lowers your score. On-time payments, on the other hand, build your credit strength over time.

✅ Tip to Improve:Set up auto-pay or reminders so you never miss a due date. Even one 30-day late mark can hurt your score for years.

2. Credit Utilization (30%)

This is how much of your available credit you're using—especially on credit cards.

If you have a $5,000 limit and you're carrying a $4,000 balance, your utilization is 80%. That’s way too high. Lenders prefer you stay under 30%, and under 10% is ideal.

✅ Tip to Improve:Pay down your balances, especially before statement dates. Don’t close old cards after paying them off—it lowers your total available credit and can hurt your score.

3. Length of Credit History (15%)

How long have you had credit? Lenders want to see a long, responsible track record.

This includes the age of your oldest account, your newest, and the average age of all accounts. A longer history = more trust from lenders.

✅ Tip to Improve:Keep older accounts open, even if you don’t use them often. The longer your history, the better.

4. Types of Credit (10%)

Also called “credit mix,” this factor looks at the variety of credit accounts you have—like credit cards, auto loans, student loans, and mortgages.

Lenders like to see that you can manage different types of debt responsibly.

✅ Tip to Improve:You don’t need every kind of loan—but having both revolving (credit cards) and installment (auto, student, personal loans) can help.

5. New Credit (10%)

Every time you apply for new credit, it creates a hard inquiry on your report. Too many inquiries in a short period can hurt your score and signal risk to lenders.

Also, opening a bunch of new accounts at once lowers your average account age, which can drop your score temporarily.

✅ Tip to Improve:Only apply for credit when you need it. And if you’re rate-shopping (like for an auto loan), do it within a 14–45 day window so it counts as one inquiry.

Final Thoughts: Know the Score, Play the Game

Your credit score isn’t just a financial badge—it’s a tool that can either open or close doors. Understanding these five factors gives you the power to:

• Raise your score

• Qualify for better loans

• Save money on interest

• And get approved faster for refinancing, credit cards, and mortgages

Need help getting your credit ready to refinance your auto loan?We’ll guide you through the process—and even help you pre-qualify with no credit hit.👉 Check your options here