What Goes Into Your Credit Score

Although building your credit score can seem expensive or daunting, a secured loan is a simple way to build your score, and your savings, without going into debt. 

Have you wondered what goes into your credit score? If you want to boost your credit, understand the five factors credit bureaus use to determine your credit score:

  • Payment history (35%): Your payment history is seen as an indicator of how responsible you are as a borrower. It includes paying your bills on time, and if you have filed for bankruptcy.
  • Credit utilization ratio (30%): Your credit utilization ratio is a representation of the percentage of available credit that you're currently using. A credit utilization ratio of 30% or less can help your credit score.
  • Length of credit history (15%): The length of your credit history can boost your score, particularly if have consistently paid your bills for a significant length of time. This is the one category where older consumers have an advantage over their younger counterparts, as someone with 10 years of timely payments might be a more ideal loan candidate than someone with only one year of accounts under his or her belt.
  • New credit accounts (10%): In addition to how many accounts you hold, your credit score will be affected by how many new accounts you open, particularly within a short time frame. If you are new to building credit, it is better to open new accounts over a longer period of time.
  • Credit mix (10%): Your score is affected by the type of accounts you hold. That includes a mix of accounts such as credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It's not necessary to have one of each of these accounts. While not a key factor in your credit score, it can carry more weight if you don’t have much information on your credit profile.

As you can see, not all accounts or credit activity is created equal. Payment history and credit utilization care more weight in determining your score. When looking to increase your credit score, pay extra focus on payment history and credit utilization. 

Interested in building your credit, without going into debt or incurring unnecessary fees? Check out Motiv's credit-builder, which is free for active Motiv account holders.