The Five Factors of Credit Scoring

The exact recipie that makes a credit score is a tightly guarded secret for each of the credit bureaus, and they offer countless different score "models".  Each "model" will weigh each of the following slightly different.  Credit scores are generally comprised of the five factors below. Points are given or subtracted for each component, and the higher score the better. The factors are listed below in order of importance and generally accepted percentages which they factor into a credit score.

Paying bills on time and in full has the greatest positive impact of all on your credit score. Late payments, collection accounts, judgments, charge−offs and public record items all have a negative impact. More recently missed payments will have a greater impact on your score than those that are at least 2 years old.  The later the payment the greater the impact, for example a 60 day late payment has a greater impact than a 30 day late payment.  Paying a mortgage late also can also have a very large impact on your score.

How much of your balances do you owe?  The more you owe, lower your score will be.  Ideally being under 10% of available credit on credit cards, under 30% for sure, and never over 50% of available credit.  A quick fix, ask for a credit line increase.

How long have you had accounts open.  Longer is better.  This is why you don't want to close those old credit cards you never use (as long as they don't have annual fee's), and why moving your credit card balances from one 0% card to another can actually hurt your score.  A seasoned borrower will always be stronger in this area.

Do you have installment, revolving and mortgage debt?  You need all three to be well rounded and to get full benefit from this portion of your score.

This takes in to account the number of times creditors have pulled your credit report recently.  An area where everyone is concerned, but in reality it is just 10% of your score.  If you have better credit, a new pull will not effect you more than likely and if you have poor credit, it won't be the new pull keeping you from getting the new loan.  Each new pull can cost from 2 to 25 points on your credit score, but only up to a total of 10 pulls. So, 11 or more pulls within a six−month period will have no further impact on your credit score. If you get a copy of your report as allowed each year, it will have no affect on your score.

Please remember that your credit score is a computerized calculation.  Personal factors are never taken into consideration when a credit report is generated. It has does not look at where you work, or what you make, and if you are married, single, or anything like that.  It is merely a snapshot of the facts as outlined above.

How To Request Your Credit Report explains how to request your credit report as a part of The Fair Credit Reporting Act which guarantees you access to a free credit report from each of the three nationwide reporting agencies Experian, Equifax, and TransUnion every year.

I Have Errors On My Report, Now What? describes how to write a simple dispute letters to the credit bureaus if you have found an error on your report.


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As quoted in the New York Times "A Little-Known Loan Program", and in the Hartford Courant "Moving In:Couple Combining Households Buys In Newington" and "Moving In... New Britain"


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Comment balloon 2 commentsJon Sigler • September 07 2007 10:26PM


This is extremely helpful!  Thanks for posting.
Posted by Julie Wynn (Wynning Interiors, LLC) about 13 years ago

Julie,   Thank you.

Posted by Jon Sigler, South Windsor Homes for Sale 860-306-8029 (Keller Williams - Greater Hartford) about 13 years ago

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