What Makes Up Your Credit Score: 5 Factors Explained (2025)

Your credit score might seem like a mysterious number, but it’s actually built from five clear components that you can understand and improve. If you’ve ever done any research on what makes up your credit score, you probably felt very confused as the amount of information online is overwhelming. But once you break down your score into individual components and understand the impact that each one has on your score, everything will start to make sense. Today, I’m sharing the exact framework that helped me understand what makes up a credit score, using plain English and real examples from my own credit journey. Whether you’re just starting to build credit or looking to boost your score, understanding these components is like having a roadmap to better credit.

Understanding Credit Score Ranges

Credit scores typically range from 300 to 850. Here’s how the scores break down:

• Excellent: 740 or higher
• Good: 670-739
• Fair: 580-669
• Poor: Under 580

Understanding the Components of Your Credit Score

Before we dive into each factor that makes up your credit score, it’s important to understand how they work together. Think of your credit score like a recipe – each ingredient contributes something different to the final result. Some ingredients (like payment history) are more important than others, but they all play a crucial role in creating your credit score.

The FICO scoring model, which is used by 90% of top lenders, breaks down your credit score into five main components:

• Payment History: 35%
• Credit Utilization: 30%
• Length of Credit History: 15%
• Credit Mix: 10%
• New Credit: 10%

What surprised me when I first learned about these components was how skewed their impact is. Over half of your score (65%) comes from just two factors: payment history and credit utilization! This means that if you focus your efforts on these two areas, you can make significant improvements to your credit score even if you’re not perfect in other categories.

Now, let’s break down each component in detail, starting with the most important one: your payment history.

Payment History (35% of Your Score)

Think of your payment history like your financial report card. Every time you make a payment on your credit cards, loans, or other credit accounts, it’s like getting a grade. Make the payment on time? That’s an A+! Miss a payment? Well, that’s more like an F, and unfortunately, it can really bring down your overall GPA (I mean, credit score).

Here’s what actually shows up in your payment history:

• Credit card payments
• Personal and auto loan payments
• Student loan payments
• Mortgage payments
• Any accounts that go to collections
• Public records like bankruptcies or tax liens

The thing about late payments that really caught me off guard when I was learning about credit? The later the payment, the bigger the damage. A payment that’s 30 days late might ding your score, but one that’s 90 days late? That’s going to leave a much bigger mark. And here’s the kicker – these late payments can hang around on your credit report for up to seven years!

Want to maintain a perfect payment history? Here are some tips that helped me maintain a spotless record:

1. Set up automatic payments for at least the minimum amount due. Even if you plan to pay more later, having that minimum payment on autopilot means you’ll never accidentally miss a due date. For credit cards specifically, always pay the statement balance in full each month to avoid costly interest charges.
2. Use calendar reminders. I have reminders set for three days before each bill is due. This gives me time to make sure there’s enough money in my account before the automatic payment hits.
3. Keep a bill payment spreadsheet or use a budget app to track recurring payments. Tracking when everything is due in one place helps you see the big picture.

If you do miss a payment (hey, we’re all human), here’s what you should do immediately:

1. Make the payment as soon as possible.
2. Call the creditor and explain the situation.
3. Ask if they’d be willing to remove the late payment mark.
4. Request a goodwill adjustment if you have a history of on-time payments.

In my experience, many creditors will actually remove a late payment mark if you have a good payment history with them. Just call them and ask nicely. It doesn’t always work, but it’s absolutely worth trying!

Remember, every month of on-time payments is like putting money in your credit score bank. Even if you’ve had problems in the past, starting a solid streak of on-time payments is the best way to begin rebuilding your score. The impact of negative marks does fade over time, especially when you’re consistently making payments on time.

Credit Utilization (30% of Your Credit Score)

Your credit utilization rate shows lenders how much of your available credit you’re using at any given time, and it accounts for a significant 30% of your total score. The lower your utilization, the better your score will be (up to a point).

Let me break this down with a simple example:

• If you have a credit card with a $10,000 limit.
• And your current balance is $3,000.
• Your utilization ratio is 30% ($3,000 ÷ $10,000 = 0.30 or 30%).

But here’s something that may surprise you: credit scoring models often look at your utilization in two ways:

• Individual account utilization: How much of each account’s limit you’re using.
• Overall utilization: The total of all your account balances divided by the sum of all your credit limits.

So if you have multiple accounts, both numbers may matter. Even though your overall utilization might be okay, having one account with high utilization can hurt your score.

Here are some tips for optimal credit utilization:

• Keep your overall utilization under 30%.
• For the best possible scores, aim for 10% or less.
• Try to keep individual card utilization under 30% (unless meeting a spend requirement for a welcome bonus!). 
• Having 1-9% utilization is better than 0% (it shows you’re actively using credit responsibly)

A surprising tip I discovered is: your utilization is typically reported on your statement closing date, not your due date. This means you could pay your bill in full every month but still show high utilization if you’re using a lot of credit when your statement closes.

Want to lower your utilization quickly? Here are some strategies that worked for me:

1. Request credit limit increases (just make sure they won’t do a hard pull on your credit first).
2. Time large purchases right after your statement closes (giving you almost two full months to pay before it affects your utilization).
3. Keep old cards open to maintain a higher total credit limit (as long as they don’t have annual fees).
4. Use multiple cards to spread out balances (but track your spending carefully!).

One mistake I often see people make is closing old credit cards they don’t use anymore. While this might simplify your wallet, it can actually hurt your utilization ratio by reducing your total available credit. Instead, keep those no-annual-fee cards open and store them in a binder. You will need to make a small purchase on them every few months to avoid them being closed by the issuer for inactivity – fortunately, most banks will send you notice beforehand.  

Length of Credit History (15% of Your Credit Score)

When it comes to credit history length, think of it like a fine wine – it generally gets better with age. This factor makes up 15% of your credit score, and it’s one of those things that just takes time to build. You can’t hack your way to a longer credit history, but you can make smart decisions to maximize what you have.

Your credit history length isn’t just about how long you’ve had credit. The scoring models actually look at three different things:

• How long your oldest account has been open.
• The average age of all your accounts.
• How long specific accounts have been open.

Here’s what surprised me most about credit history length: closing an old credit card can actually hurt your score in two ways. First, you lose that card’s history (though not immediately – it stays on your report for up to 10 years after closing). Second, you reduce your total available credit, which can bump up your utilization ratio. Both of these factors negatively impact your credit score. 

Want to make the most of your credit history length? Here are my tried-and-true tips:

1. Keep your oldest credit card active. If it has no annual fee, there’s usually no reason to close it. Just use it for a small purchase every few months to keep it active.
2. Think carefully before opening new accounts. Each new account will lower your average account age. I try to space out new credit applications by a few months. 
3. If you’re new to credit, consider becoming an authorized user on someone else’s long-standing account (like your parents). Just make sure they have a good payment history!

One myth I want to bust: you don’t need to carry a balance or pay interest to build credit history length. Simply having the accounts open and using them responsibly is enough.

Remember, this is one factor that just takes time. If you’re just starting out, focus on the factors you can control (like payment history and utilization) while letting your credit age naturally. Even a few years of credit history can be enough for a good score if you’re managing the other factors well.

Credit Mix (10% of Your Credit Score)

Credit mix might only make up 10% of your credit score, but don’t write it off as unimportant. Think of it like a balanced diet for your credit profile – lenders like to see that you can handle different types of credit responsibly. When I first learned about credit mix, I thought having lots of credit cards was enough. Turns out, that’s not quite what credit scoring models are looking for.

There are two main types of credit that scoring models look at:

• Revolving credit (like credit cards and lines of credit)
• Installment credit (like car loans, mortgages, and personal loans)

Revolving credit is like having a reusable water bottle – you can use some, pay it back, and use it again. Installment credit is more like buying a 24-pack of water bottles – you’re committing to a fixed payment for a specific amount over time.

Here’s an example of a healthy credit mix:

• A few credit cards (revolving)
• A car loan or personal loan (installment)
• A mortgage, if you’re a homeowner (installment)
• A student loan, if you went to college (installment)

But here’s something important to consider: don’t take out loans just to improve your credit mix! That’s like buying vegetables you won’t eat just to say you have a balanced diet. The cost of unnecessary loans far outweighs any small benefit to your credit score.

Instead, focus on building your credit mix naturally over time. For example:

1. Start with a credit card and use it responsibly.
2. When you need a car, consider an auto loan instead of paying cash (only if the interest rate is reasonable).
3. If you have high-interest credit card debt, a debt consolidation loan might help both your credit mix and your utilization.

One mistake I see people make is thinking they need every type of credit account. You don’t! Having a mortgage and an auto loan isn’t necessarily better than having just one of them – it’s more about showing you can handle different types of credit when you need them.

Note: Credit mix is most important when you don’t have much other information in your credit report. As you build a longer credit history with consistent on-time payments, the impact of credit mix becomes less significant.

New Credit (10% of Your Credit Score)

Every time you apply for new credit, it’s like sending up a little red flag to credit scoring models. New credit makes up 10% of your score, and it’s not just about new accounts you’ve opened – it’s also about how many times you’ve applied for credit recently.

Here’s what catches many people off guard: every time you apply for credit, it usually results in a “hard inquiry” on your credit report. Each hard inquiry can knock a few points off your score. I learned this the hard way when I was shopping for a car years ago and let multiple dealers check my credit over several weeks. My score dropped more than I expected!

But here’s some good news I discovered later: Credit scoring models understand some types of credit shopping. For example:

• Multiple auto loan inquiries within 14-45 days usually count as just one inquiry.
• The same goes for mortgage and student loan shopping.
• However, this grace period doesn’t apply to revolving accounts like credit card applications.

When it comes to new credit, here’s what affects your score:

• How many hard inquiries you have.
• How many recently opened accounts.
• How long it’s been since you opened your last account.
• How long it’s been since your last hard inquiry.

Want to protect your score when applying for new credit cards? Here are a few guidelines that I follow:

1. Space out credit card applications by at least 3-6 months. If you’re chasing credit card welcome bonuses, alternate applications between you and your player 2 (e.g. spouse, partner, child). Note: Some issuers like American Express don’t do a hard pull if you have existing accounts with them in good standing. 
2. Do all your rate shopping for auto loans or mortgages within a two-week period.
3. Research your approval odds before applying (many card issuers now have pre-qualification tools that use soft pulls that don’t impact your score).
4. Don’t apply for new credit before applying for a major loan like a mortgage.
5. Freeze your credit with the credit bureaus (Equifax, Experian, and TransUnion) to protect you credit from unauthorized activity. You can do this online or by calling each bureau. Remember to thaw your credit before applying for new credit. 

The impact of hard inquiries usually fades after about six months, and they fall off your credit report completely after two years. More importantly, a strong credit history with good payment patterns and low utilization can easily outweigh the temporary impact of shopping for new credit.

Frequently Asked Questions

Q: How long does it take to build a good credit score? With responsible credit use, you can build a good credit score (670+) within 12-18 months of opening your first credit account. However, reaching excellent credit (740+) typically takes several years of consistent good credit habits.

Q: How often does my credit score update? Your credit score can update as frequently as once per month, typically after your creditors report your account information to the credit bureaus. Most creditors report monthly, usually around your statement closing date.

Q: Will checking my credit score hurt it? No! Checking your own credit score is considered a “soft inquiry” and has no impact on your score. You can check it as often as you like without any negative effects.

Q: How much does a late payment affect my score? A single 30-day late payment can drop a good credit score by 80-100 points or more. The higher your score, the more points you might lose. The impact decreases over time if you resume making on-time payments.

Q: Should I close credit cards I don’t use? Generally, no. Keeping old credit cards open (especially if they have no annual fee) helps your length of credit history and keeps your overall utilization lower. Just use them occasionally to keep them active.

Q: Can I build credit without going into debt? Absolutely! You can build excellent credit by using credit and paying the full statement balance each month. You never need to carry a balance or pay interest to build credit.

Q: How many credit cards should I have? There’s no perfect number, but having 2-3 credit cards is typically enough to build good credit while being manageable. What’s more important is using them responsibly and keeping utilization low.

Q: Will opening several credit cards in a short time affect my score? Each application typically causes a hard inquiry that can lower your score by 3-5 points. However, the impact is temporary and the additional credit will likely improve your credit utilization, offsetting the impact from the inquiry. If you space out new applications by a few months, the long-term impact to your credit score from the inquiries will be negligible. 

Q: Will applying for a mortgage hurt my credit score? Multiple mortgage applications within 14-45 days count as just one hard inquiry. This “rate shopping” period lets you find the best rate without extra damage to your score.

Q: How can I prepare my credit score for a mortgage application? At least 6-12 months before applying: avoid opening new credit accounts, keep credit card balances low, and make all payments on time. Many lenders look for a score of at least 620, but you’ll get better rates with scores above 740.

Free Credit Score Resources

You can check your credit score for free through several reliable sources:

• Your credit card issuer (many provide free scores)
• Credit Karma (VantageScore)
• AnnualCreditReport.com (free weekly credit reports)
• Your bank (many offer free credit monitoring)

Remember: These free tools might show slightly different scores because they use different scoring models, but they’re helpful for tracking your progress over time.

Key Takeaways

Here are the most important takeaways to improve your credit score:

• Always pay your bills on time by setting up autopay.
• Keep your account balances low, ideally under 30% of your limits.
• Don’t close old credit cards, especially if they have no annual fee.
• Space out credit applications by 3-6 months.
• Check your credit reports regularly for errors and unauthorized activity.

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