How is Your Credit Score Determined?

35% Payment History (paying on time). Notice that paying on time is the single largest factor in computing your credit score. If you are likely to forget to pay your bills on time, set everything up on auto-debit! This is super important!

30% How much you owe vs. how much credit you have available. If you have $1,000 available on your Visa and you owe $1000, your credit utilization is 100% because you are using every dollar of available credit. This is bad. If you owe $1,000 but have $10,000 of credit available, your utilization rate is only 10%. This is good.

15% How long you’ve had credit. The longer you’ve had an account the better. That’s why some argue that using the same card is better than jumping around to new cards with lower interest rates every 6 months.

10% New credit. Try not to open more than 1 new credit card per year. Opening lots of new cards can hurt your credit score because it looks like you are semi-desperate. This means don’t open a new card every time a store offers you 10% off.

10% Types of Credit. Diversified types of credit is best, meaning you have more than just credit cards on your credit report.

Graph from myfico.com.