What are the Five Factors that Impact Your Credit Score?

Your credit scores usually determine the price you pay for your money (your mortgages, auto loans, auto leases, credit cards, business loans, etc.). Perhaps the most significant part of your credit report is your credit score. Credit scores range from 350 to 850, with 850 being the best possible credit score, and 350 being the worst possible credit score. There are three credit bureaus in the US that collect information about you from your creditors. These bureaus then calculate a credit score based on that information. This means that you have three credit scores, one issued by each of the three credit bureaus:

• Equifax
• Experian
• Transunion

Mortgage lenders typically order a tri-merged credit report when you apply for a home loan. The tri-merged credit report gives the lender information from all three credit bureaus. The lender typically uses your middle credit score or the lowest of your three credit scores when they evaluate your loan application. These five factors determine your credit score:

• Your timely payment history looks at whether you pay your bills on time. This has a 35% impact on your score.
• Your balance-to-limit ratio looks at the balances you owe vs. your available credit lines. This has a 30% impact on your score.
• Your length of credit history looks at how long your accounts have been opened. This has a 15% impact on your score.
• Your types of credit mix looks at the types of credit you have open. This has a 10% impact on your score.
• Your new credit and inquiries looks at the number of recent inquiries made by creditors. This has a 10% impact on your score.