5 Factors That Determine Your Credit Score
(And How To Improve Your Credit Fast)
“I pay my bills on time… so why is my credit score not going up?”
I hear this all the time.
Most people think credit scores are just about paying things on time—but that’s only part of the picture.
In reality, your credit score is made up of several different factors. And if you don’t understand how they work together, you could be hurting your score without even realizing it.
The good news? Once you understand the system, it becomes a lot easier to improve your credit and put yourself in a better financial position.
Let’s go over what is actually used to calculate your score as well as how you can improve your score yourself.
The 5 Factors That Make Up Your Credit Score
1. Payment History (35%)
This is the biggest piece of the puzzle.
Lenders want to know one thing: do you pay your bills on time?
- Late payments can significantly drop your score
- Even one missed payment can have a lasting impact
- Consistency matters more than anything here
If you’re trying to improve your credit, this is the non-negotiable starting point.
2. Credit Utilization (30%)
This is where a lot of people unknowingly hurt themselves.
Credit utilization is how much of your available credit you’re using.
For example:
- Credit limit = $10,000
- Balance = $5,000
- Utilization = 50%
Most experts recommend keeping this under 30%—but ideally under 10% for the best scores.
Quick tip: Paying your balance down before your statement closes (not just the due date) can help improve your credit faster than you think.
How to Improve Your Credit by Managing Utilization
If you’re carrying high balances, this is one of the fastest ways to see results.
- Pay down credit cards strategically
- Spread balances across multiple cards if possible
- Avoid maxing out cards—even temporarily
This single adjustment can make a noticeable difference in a relatively short amount of time.
3. Length of Credit History (15%)
The longer your credit history, the better.
This is why closing old credit cards can sometimes hurt your score.
- Older accounts show stability
- They increase your average account age
- Even unused cards can help your score
4. Credit Mix (10%)
Lenders like to see that you can handle different types of credit.
This could include:
- Credit cards
- Auto loans
- Student loans
- Mortgages
- Equity Loans/Lines of Credit
That said, don’t go opening new accounts just for the sake of “mix.” It’s a smaller factor.
5. New Credit & Inquiries (10%)
Every time you apply for credit, it can result in a hard inquiry.
- Too many inquiries in a short period can lower your score
- “Rate shopping” for a mortgage is typically grouped together if done within a short window
This is where having a strategy matters.
Common Mistakes That Hurt Your Score
Even financially responsible people make these without realizing it:
- Maxing out credit cards (even if you pay them off later in full)
- Closing old accounts
- Missing just one payment
- Applying for multiple credit lines at once
Avoiding these mistakes is just as important as the steps you take to improve your credit.
Why This Matters More Than You Think
Your credit score doesn’t just affect whether you get approved—it affects how much you pay.
A difference of even 40–60 points could mean:
- A higher monthly payment
- Less favorable loan terms
- Thousands of dollars more paid over time
- Qualifying for Conventional mortgage over FHA (read my blog on why Conventional loans are better)
That’s why taking the time to improve your credit isn’t just a financial exercise—it’s a long-term money-saving strategy.
How to Improve Your Credit Before Buying a Home
If you’re thinking about buying, timing matters.
Small adjustments made a few months in advance can have a big impact when it comes time to apply for a mortgage.
- Do not miss ANY payments. Make at least the minimum payment on ALL your cards and credit lines of any kind.
- Don’t take on new debt just to try to raise your score. New inquiries can drag your score down slightly but more importantly it will hurt your debt-to-income ratio, another large factor in qualifying for a mortgage.
- Keep your balance below 30% of your total credit limit on a single line.
- Get in touch with a credit building company if you need extra help or have a large amount of uncontrolled debt.
- Follow my FinLit series of blogs to set yourself up to be a powerhouse buyer!
Need Help with a Specific Credit Issue?
I work with you in your individual situation. You get expert advice and guidance, at no cost. You get someone who can actually help you prepare to buy or sell, not just show up when you’re ready to go on the market or start searching for homes. You get assistance months or even years in advance, so you can have an easier time in the marketplace when you are ready to buy or sell.
If this sounds like the service you desire, reach out to me personally for no pressure, 1-on-1 personalized advice about your real estate goals.
No committing, just consulting.
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