How Credit Works

What Affects Your Credit Score?

What affects credit score - small

Your credit score is impacted by many of the financial choices you make – from opening too many accounts to missing payments.

What seems to many to be a small, three-digit number can have a huge impact on your financial choices in life.

Your credit score is a gauge lenders use to evaluate your creditworthiness and trustworthiness. It helps them decide not only whether you’ll be approved for things such as private student loans or mortgages, but also, and sometimes more importantly, how much you’ll pay for each of those items.

To truly understand what affects your credit score, let’s take a look at what goes into it.

How is my credit score calculated?


The first thing to note when asking this question is to understand that there are multiple credit scoring models.

The most commonly known model is FICO, which is used by about 90% of lenders to make credit decisions. Though VantageScore models exist too.

While both FICO and VantageScore rely on the same basic categories to establish credit history, they place slightly different emphasis on certain categories.

FICO Score

  • Payment History - 35%
  • Amounts Owed - 30%
  • Length of Credit History - 15%
  • New Credit - 10%
  • Types of Credit - 10%

VantageScore 3.0

  • Payment History - 40%
  • Amounts Owed - 20%
  • Length of Credit History - 21%
  • Balances - 11%
  • Recent Credit - 5%
  • Available Credit - 3%
The importance of each of these categories varies slightly per person. For example, people who have not been using credit long will be considered differently than those with a longer credit history.

Learn more about how these [factors impact your credit score here.]( "Learn the 5 major factors that impact your credit score, straight from Self Financial. ")

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