Staff Contributor

Your credit score is like a report card on your debt management habits. And just as with a report card, different aspects of your grade are given different weight. There are five main factors that go into calculating your credit score.

Paying your bills

More than one-third of your credit score is calculated based on how well you do making payments on time. This includes whether you pay all of your bills on time and whether any accounts are currently past due or in collections.

Amounts you owe

How much debt you have is the second main factor in calculating your credit score and accounts for about 30 percent. This factor looks at how much debt you have overall and how much debt you have in relation to how much overall credit you have available.

It also looks at how much you owe on installment loans vs. revolving credit accounts such as credit cards.

Length of credit history

This factor, which accounts for 15 percent of your score, looks at how long you have had your accounts. It takes into account how old your oldest account is, the overall age of your accounts, how long you have had certain types of accounts and how long it has been since you last used an account.

All things being equal, someone with a longer credit history will have a slightly better credit score than someone with a shorter history.

Types of credit

Types of credit used looks at the mix of accounts you have.

For example, do you have both credit cards and installment loans such as a mortgage and car loan? This factor also looks at how many of each type of accounts you have.

New credit

This factor looks at how many recent inquiries you have for new credit.

If you open, for example, several new credit accounts at the same time, it could hurt your credit score, because lenders consider this risky behavior. This factor also accounts for 10 percent of your score.


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