Your credit score is a vital part of your financial health. Understanding the factors that impact it is essential for maintaining a good score.

1. Payment History

Your payment history makes up approximately 35% of your credit score.

• Timely payments boost your score
• Late payments can significantly lower it
• Bankruptcies and defaults heavily impact this factor

2. Credit Utilization Ratio

This ratio accounts for about 30% of your score.

• Ideally, keep your credit utilization below 30%
• High utilization indicates over-reliance on credit
• Lower utilization can improve your score

3. Length of Credit History

This factor contributes around 15% to your score.

• Longer credit histories are favorable
• Closing old accounts can negatively impact this
• Keep old accounts open to maintain a long credit history

4. Types of Credit Accounts

This accounts for approximately 10% of your score.

• A diverse mix of credit (credit cards, loans) can be beneficial
• Too many new accounts can hurt your score
• Maintain a mix, but don’t overdo it

5. Recent Credit Inquiries

New credit inquiries make up about 10% of your score.

• Hard inquiries (when you apply for credit) can lower your score
• Soft inquiries don’t affect your score
• Limit new applications to avoid score drops

Credit Score Factors Breakdown

Mind Map of Credit Score Factors

• Credit Score
• Payment History
• Credit Utilization
• Length of History
• Types of Accounts
• Inquiries

Conclusion

Improving your credit score involves understanding and managing these key factors. Regularly monitoring your credit can help you identify areas for improvement.