What Factor Has the Biggest Impact on a Credit Score?

A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of an individual.

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Payment history

Your payment history has the biggest impact on your credit score because it shows lenders whether or not you pay your bills on time. If you always pay your bills on time, you’ll have a good payment history and a high credit score. But if you sometimes miss payments or pay your bills late, you’ll have a poor payment history and a low credit score.

Types of debt

There are two types of debt that can impact your credit score: revolving and installment.

Revolving debt, such as credit cards, lines of credit, and home equity lines of credit, is debt that does not have a set repayment schedule. The balance of this type of debt goes up and down as you make purchases and payments.

Installment debt, such as mortgages, auto loans, and student loans, is debt that has a set repayment schedule. The balance of this type of debt remains the same each month until it is paid off.

Both types of debt can impact your credit score in different ways. Here’s a look at how each type can affect your score:

Revolving Debt
Your revolving debt utilization ratio is the amount of revolving debt you have divided by the total amount of credit you have available. For example, if you have a $1,000 balance on a credit card with a $5,000 limit, your revolving debt utilization ratio would be 20%. This ratio makes up 30% of your FICO® Score* calculation, so it’s important to keep it low — ideally below 30%.

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Length of credit history

One of the factors that has the biggest impact on your credit score is the length of your credit history. This is the amount of time that you have had credit accounts open and active. The longer your credit history, the better your credit score will be. This is because it shows lenders that you have a good track record of making on-time payments and managing your debts.

Another factor that has a big impact on your credit score is your payment history. This is a record of whether you have made your payments on time or late. Lenders will look at this when they are considering you for a loan or line of credit. If you have missed payments or made late payments, it will hurt your score.

The third factor that has a significant impact on your credit score is the amount of debt that you owe. This is also called your debt-to-credit ratio. It is the amount of money that you owe compared to the amount of credit that is available to you. If you have a lot of debt, it will hurt your score.

The fourth factor affecting your credit score is the type of credit account that you have. There are two main types of accounts: revolving and installment. A revolving account, such as a credit card, has a limit on how much you can spend in a month. An installment account, such as a car loan or mortgage, has set monthly payments over a period of time. Lenders like to see both types of accounts on your credit report because it shows that you can manage different types of debts responsibly.

The fifth factor impacting your credit score is the number of inquiries made on your report. An inquiry happens when someone checks your report when considering you for new credit. Too many inquiries in a short period of time can hurt your score because it makes you look like you are trying to get too much new credit all at once.

New credit

New credit has the biggest impact on your credit score. This includes any new credit cards, loans, and lines of credit you may have.


Data from Experian shows that credit utilization—or the percentage of your credit limit that you’re using at any given time—has the biggest impact on your credit scores. That’s because credit scoring models view people who use a larger percentage of their credit limits as higher-risk borrowers.

To put it simply, the lower your utilization, the better for your scores. Even if you only have a few accounts, carrying a balance on one or two cards can hurt your scores if it pushes your utilization too high.

The sweet spot for utilization is 30% or less. That means if you have a $1,000 credit limit, you should aim to keep your balance below $300 at all times. However, the lower your utilization, the better for your scores—so it’s worth striving to keep your balances even lower than 30%.

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