The Five Factors That Affect Your FICO Score

When you check your FICO Score, you see one number. Behind that number, the scoring model looks at several parts of your credit history.

Understanding those parts can help you focus on the habits that matter most. You don’t need to chase every small change in your score. Instead, pay attention to how you pay, how much you owe, how long you’ve used credit, how often you apply for new credit, and the types of accounts you manage.

FICO groups this information into five general categories. Each category carries a different weight in the scoring model.

Payment history: 35%

Payment history has the largest influence on your FICO Score.

FICO looks at whether you pay your credit accounts as agreed. That means making your payment on time and paying at least the minimum amount due.

If you miss a payment, the scoring model considers several details. It looks at how recently the late payment happened, how late the payment became, and how many accounts show late payments.

A payment that’s 30 days late carries a different level of risk than one that’s 90 days late. A recent late payment also has more influence than one from several years ago.

That doesn’t mean one missed payment will define your credit forever. As negative information gets older, its effect may decrease. Your best response is simple: bring the account current and keep future payments on time.

If you’re trying to strengthen your credit, start here. Set reminders, use automatic payments, or choose another system that helps you pay by the due date. Consistency matters more than trying to make a dramatic change all at once.

Amounts owed: 30%

The second-largest category looks at how much you owe.

For credit cards and other revolving accounts, FICO pays close attention to credit utilization. Credit utilization compares the balance on your revolving accounts with the total amount of credit available to you.

For example, if you have a credit card with a $1,000 limit and a $200 reported balance, your utilization on that card is 20%.

FICO may review utilization on each revolving account and across your revolving accounts as a whole. In general, lower utilization reflects lower credit risk.

You may have heard that you should keep your utilization at 30%. This is a myth. FICO doesn’t treat 30% as an ideal target. Lower utilization generally works in your favor.

That doesn’t mean you need to stop using your credit cards. Use them for purchases that fit your budget, then pay down the balance. If you can pay your statement balance in full each month, you also avoid interest charges on purchases when your account terms provide a grace period.

FICO also looks at installment loans, such as auto loans. For those accounts, the scoring model considers how much of the original loan balance you still owe.

Length of credit history: 15%

The length of your credit history accounts for 15% of your FICO Score.

The scoring model looks at how long you’ve had credit. It may consider the age of your oldest account, the average age of your accounts, and how recently you opened a new account.

You can’t speed up this part of your credit history. Time does the work.

If you’ve managed an older account well, think carefully before closing it. Closing an account may affect your overall credit profile, depending on the rest of your credit history.

At the same time, don’t keep an account open if it no longer fits your needs, especially if it carries fees or creates another reason to overspend. Your financial needs should come first.

If you’re new to credit, focus on building a steady record. Keep your account in good standing and give your history time to grow.

New credit: 10%

FICO calls this category the pursuit of new credit.

When you apply for a new credit card, loan, or other type of credit, the lender may review your credit report. That review can create a hard inquiry.

Hard inquiries may affect your FICO Score. The effect is usually limited, but several applications within a short period may have a greater impact.

FICO considers hard inquiries for 12 months, even though the inquiries may remain on your credit report for 24 months.

Soft inquiries work differently. Checking your own credit doesn’t hurt your FICO Score. Preapproved credit offers and certain account reviews also use soft inquiries.

You don’t need to avoid new credit altogether. Apply when the account supports a real financial need.

If you’re planning a major loan, such as a mortgage or auto loan, avoid opening several unrelated accounts right before you apply. Give yourself a cleaner window for the lender to review your credit.

FICO also uses special rate-shopping rules for certain types of loans. Multiple inquiries for auto, mortgage, or student loans made within a limited shopping period may count as one inquiry for scoring purposes. That allows you to compare offers without taking a separate scoring hit for every lender you contact.

Credit mix: 10%

Credit mix makes up the final 10%.

This category looks at the types of credit accounts you manage. Your credit file may include revolving accounts, such as credit cards, and installment accounts, such as auto loans or mortgages.

FICO data shows that people who successfully manage different types of credit may present lower risk.

Still, this is the least important category in the five-factor model. To be clear: don’t open a new account just to improve your credit mix.

If you don’t need a new loan or credit card, don’t borrow simply to add another type of account to your report. A new account may create a hard inquiry, shorten the average age of your credit history, and add another monthly obligation.

Let your credit mix grow naturally as your financial needs change.

Focus on the factors you control

The five categories don’t carry equal weight, so your attention shouldn’t either.

Payment history and amounts owed make up the largest share of the scoring model. That gives you a clear place to focus. Pay your credit accounts as agreed, and keep revolving balances low compared with your available credit.

Then protect the rest of your profile. Keep older accounts in good standing, apply for new credit with purpose, and don’t take on debt just to create a different credit mix.

Your FICO Score may rise or fall as lenders report new information. You don’t need to react to every change: just build good habits that support your credit over time.