What’s In a Credit Score?

The credit score is one of the most significant numbers a person has in his or her life. It has drastic affects on an individual’s lifestyle, finances, as well as the ability to retire and relax comfortably without worries.

If managed correctly and wisely, the credit score may bring benefits such as low interest rates and higher credit limits, combined with the personal satisfaction and knowledge that the credit history is not something to worry about. However, before one even has to worry what his or her score is, it is better to have an inkling of what factors influence and affect the magic number. As such, there are five criteria that generally affect an individual’s credit score, and they are:

  • Payment history, which is said to weigh about 35% of the overall credit rating. The key determinant as to whether this is a positive or negative influence to the score is whether the individual is making timely bill payments regularly. Although a missed payment or two may not necessarily tarnish the records, it is more on the consistent delinquency regarding payments that hurts a person’s credit rating. It could be late payments, or if the record has reached collections. Thus, it is always advised to keep a solid and clean track record of payments that are on time to get the highest grade from this criteria.


  • For 30%, what also influences a person’s credit score is the amount of money owed by the individual against the amount of credit that is still available. With this criterion, it is not an automatic negative mark on the credit records if an individual owes money – but rather, how close he or she is to maximizing out the credit limits set by the credit card company. Using a high percentage of the credit made available to the individual influences the score negatively. Therefore, it is best to keep credit balances at a minimum, and to always ensure that payments cover more than the minimum due amount every month.
  • The length of an individual’s credit history comprises 15% of his or her overall credit score. This criterion looks at how long the credit account has been open, and the frequency that the credit is being utilized. For individuals who’ve only had accounts open for a short period of time, it is best to ensure that the credit is being managed properly, before opening new ones.


  • 10% of the credit score is based on the mix of the individual’s credit. If an individual has credit cards, and also instalment credits such as car loans and mortgages, the maintenance of these accounts will reflect positively on the credit rating.
  • The last 10% goes to new credit applications. Credit ratings are also concerned on whether an individual applies for new credit accounts within a short period of time. The number of credit accounts an individual has, combined with the different type of credits he applied to (loans, credit cards, etc) may have a negative impact on the credit score as well.


This knowledge is very helpful in learning how to maintain a positive credit rating, to ensure that there won’t be much of difficulties if the need arises to loan a car, or cash from lending companies. However, it is not merely this knowledge that helps credit scores to soar high – but the actual behaviour of paying on time and settling the whole repayment balance due for the month, as well as making sound and informed decisions about credit applications and other related matters.