What Affects Your Credit Score?

Your credit score is based on several key factors, each weighted differently in your overall FICO^® Score. Understanding how these elements work can help you focus on what matters most when building credit.

Chime members can view their FICO Score for free in the Chime app. Here’s a breakdown:

Your payment history makes up 35% of your FICO credit score, making it the most important factor that affects your credit score.³ Once a payment is 30 days late, the creditor will report it to the credit bureaus and decrease your credit score.⁴ Even one late payment can make a noticeable dent in your score.

One of the easiest things to do to improve your credit score is to pay your bills on time. If you have trouble remembering, take advantage of autopay or set up reminders. Your credit score will thank you.

The amount you owe in relation to your credit limit accounts for 30% of your FICO score.³ The higher your card balance, the higher your credit utilization ratio. This ratio compares your total outstanding balance to your total available limit across all your cards.

For example:

• If your total credit balance is $500 and the maximum limit on all your credit cards combined is $5,000, your credit utilization ratio is 10%.
• If you have $1,000 on your cards and a limit of $5,000, your credit utilization ratio is 20%

Keeping a low credit utilization ratio – ideally in the single digits – can help boost your credit score.

One way to establish credit as a beginner is with a secured credit card. This type of card is intended for those with no credit or poor credit. When you open an account, you’ll make a security deposit that usually acts as your credit limit.

The limit on a secured credit card is usually much lower than that of an unsecured credit card, making it harder to run up a large balance. Using a secured credit card responsibly can help boost your credit score.

The length of your credit history accounts for 15% of your FICO credit score. A short history doesn’t give lenders much insight into how well you manage debt, whereas a longer history gives them a clearer picture of your financial responsibility.

The credit bureaus measure this factor by looking at: 

• The age of your oldest and newest credit accounts
• The average age of all your accounts
• The time since you last used certain accounts

You can still have a good credit score even if your credit history is relatively short, as long as you pay your bills on time and keep your balances low.⁵

Credit mix makes up 10% of your FICO credit score. Lenders consider both installment loans (like mortgages and car loans) and revolving credit (like credit cards and other lines of credit). If you only have one type of credit, your score may be lower.

This factor is one of the least influential, so it’s not vital to have a mix of credit cards, retail accounts, and loans. In fact, applying for credit you don’t need may actually lower your score. But if you want to achieve an 850 credit score, it might be worth applying for other types of credit.⁶

New credit makes up approximately 10% of your FICO credit score.⁷ Applying for new credit can have a slightly negative impact on your credit score, though it’s usually only by a few points.⁶

When you apply for a new credit card or loan, the lender will run a “hard inquiry.” This is an official review of your credit history that can temporarily lower your score. 

FICO considers inquiries from the last 12 months, but those inquiries will remain on your credit report for two years. That’s why it’s important to only apply for credit when necessary.

Although many factors affect your credit score, there are plenty that don’t, including the following:

• Rent and utility payments are usually not reported to credit bureaus, so they won’t affect your score unless you or your landlord uses a rent reporting service.⁸
• Income and bank balances are not reported to credit bureaus.
• Checking your credit score is considered a soft inquiry and won’t affect your score.
• Getting prequalified for a loan or credit card doesn’t affect your credit score because it uses a soft credit check.
• Paying with a debit card uses money you already have for purchases and won’t impact your credit score.
• Denied credit card applications won’t affect your credit score, though it might dip slightly when you initially apply.
• Using credit counseling services won’t factor into your credit score – and it can actually help you boost your score.⁹

Building credit takes time – it can take several months if you are starting out and potentially longer if you’re rebuilding your credit after it’s been damaged by bankruptcies or foreclosures.¹⁰

Understanding what affects your credit score is the first step toward building a stronger financial future. By focusing on the big things – like paying your bills on time and keeping your credit card balances low – you can make real progress. Remember, building good credit is a marathon, not a sprint. Every on-time payment and smart credit decision is a win worth celebrating!

To keep tabs on your progress, see our guide on how to check your credit score.