How is Your Credit Score Calculated?

Posted on: 01/17/2020 at 10:28 a.m.

Your financial reputation depends on a positive credit score. Because of this, it’s important for you to understand the contributing factors that make up your credit score:

  • Payment History (35%). This factor contributes the greatest weight to your overall credit score – and for good reason. Your payment history helps answer the question: “Will you repay credit extended to you by a lender?” Your credit report includes every type of credit you’ve received and how you’ve repaid that debt. A lender will be able to see if you’ve been late or missed any payments, and whether you’ve had a bankruptcy or any other type of collection issue.
  • Credit Utilization (30%). Another key factor lenders review is how much credit you have available. This allows lenders to learn how you use credit and whether you can take on more debt.
  • Credit Age (15%). The next contributing factor to your credit score is how long you’ve had credit. Your credit score is derived by how long your oldest and most recent accounts have been open. Typically, your credit score will improve when you have a history of responsibly paying off your credit accounts for a longer period of time.
  • Mix of Credit (10%). Your credit score is also impacted by the different types of credit you carry as well as the mix of credit you have (revolving and installment loans). The more mix of credit you have, the better your score will be.
  • Number of Inquiries (10%). Your credit score is impacted by the number of “hard inquiries” on your credit report. A hard inquiry occurs when a lender checks your credit score in response to a credit application you’ve submitted. A large number of hard inquiries (especially if they occur in a short period of time) can have a negative effect on your score. On the other hand, your credit score is not affected by a “soft inquiry.” These inquiries include preapproved credit offers, or when a lender reviews your existing account to potentially offer an increased credit limit.

Check your credit score at least annually (free of charge) by visiting

Information is for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author.