Credit scores range anywhere from 300 to 900 points, and they are affected by five different factors. Each individual factor accounts for varying percentages of a credit score. Payment history makes up 35 percent of one’s credit score, making it the largest contributing factor. Late payments, foreclosures, and bankruptcy all lower credit scores. If late payments have been a problem in the past, start paying on time; it will have less impact the longer you consistently make payments on time. The second largest factor is debt, accounting for 30 percent of one’s score. Although some debt is good, too much, especially credit card debt, negatively affects credit scores.
Accounting for 15 percent of scores is credit history, which includes a track record of an individual’s different credit accounts and credit management. The longer one has had credit, the more positively it affects one’s score, while a recently opened account or little history of credit negatively affect scores. The final 20 percent is equally split between how often individuals apply for credit accounts and what types of credit accounts individuals currently have. Excessively shopping for credit, and having too many of only one type of credit account, both bring down credit scores.