1. Payment History: 35% Your payment history carries the most weight in factors that affect your credit score, because it reveals whether you have a history of repaying funds that are loaned to you. This component of your score considers the following factors:3.
Payment history — whether you pay on time or late — is the most important factor of your credit score making up a whopping 35% of your score.
The two major scoring companies in the U.S., FICO and VantageScore, differ a bit in their approaches, but they agree on the two factors that are most important. Payment history and credit utilization, the portion of your credit limits that you actually use, make up more than half of your credit scores.
The primary factors that affect your credit score include payment history, the amount of debt you owe, how long you've been using credit, new or recent credit, and types of credit used.
Credit scoring models generally look at how late your payments were, how much was owed, and how recently and how often you missed a payment. Your credit history will also detail how many of your credit accounts have been delinquent in relation to all of your accounts on file.
Your credit score (sometimes also called your credit rating) is based on your borrowing and repayment history – and includes how often you've shopped around for credit too. Lenders will use this rating, alongside their own risk criteria, to decide whether to lend to you, how much and at what rate of interest.
FICO is clear about how it weighs credit-scoring factors, with payment history carrying the most weight, followed by amounts owed, credit age, credit mix and new applications.
FICO® Scores consider a wide range of information on your credit report. However, they do not consider: Your race, color, religion, national origin, sex and marital status.
Your credit report does not include your marital status, medical information, buying habits or transactional data, income, bank account balances, criminal records or level of education.
Your repayment history
Lenders and other service providers report arrears, missed, late or defaulted payments to the credit reference agencies, which may impact your credit score. This isn't limited to mortgage, credit card, loan, car finance and overdraft payments.
Bottom line. As you can see, the biggest hits to your credit score come from missed payments, too much debt and certain measures you have to take to dig yourself out of major debt. But even those corrections are designed to get you back on track.
FICO scores are generally known to be the most widely used by lenders. But the credit-scoring model used may vary by lender. While FICO Score 8 is the most common, mortgage lenders might use FICO Score 2, 4 or 5. Auto lenders often use one of the FICO Auto Scores.
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2022, the average FICO® Score☉ in the U.S. reached 714.
The FICO® Score☉ , which is the most widely used scoring model, falls in a range that goes up to 850. The lowest credit score in this range is 300. But the reality is that almost nobody has a score that low.
Very Good Credit: 740 to 799. Good Credit: 670 to 739. Fair Credit: 580 to 669. Poor Credit: Under 580.
Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.