Ever wondered why your credit score seems to change even when you’re doing your best to manage your money? You’re definitely not alone. A lot of people are unsure about what really goes into their credit score or what they can do to keep it in good shape.
Your credit score is one of the most important numbers in your financial life. It helps lenders decide if they should give you a loan, what interest rate you’ll get, and even whether you can rent an apartment. But here’s the thing—your credit score isn’t random. It’s based on a few clear factors that you can actually control.
Let’s break down the top five things that can either help or hurt your credit score. Knowing what matters most can make it a lot easier to take the right steps.
1. Your Payment History (This One Counts the Most)
This is the biggest piece of your credit score puzzle. Payment history makes up around 35% of your total score. That means lenders really care about whether you’ve been paying your bills on time. Even just one missed payment can drop your score and stay on your report for years.
The good news? It also works the other way. If you make regular, on-time payments, you’re showing lenders that you’re responsible. This can slowly build up your credit profile and improve your score.
This is where personal loans can come in handy. If used correctly, a personal loan isn’t just a way to cover an expense—it can also help your credit. Making steady payments on a personal loan can help build a strong payment history over time. Here’s a great breakdown of how that works: https://www.sofi.com/learn/content/how-personal-loan-can-boost-credit-score/
This informative link covers how installment loans can show up positively on your credit report when you make payments on time.
2. How Much You Owe (a.k.a. Credit Utilization)
This one’s all about how much of your available credit you’re using. It’s often called your credit utilization rate. Let’s say you have a credit card with a $10,000 limit, and you carry a $6,000 balance. That’s 60% utilization, which is considered high.
Lenders usually like to see this number under 30%. That shows you’re using credit, but not too much of it. High balances make you look riskier, even if you’re paying the minimums on time.
If you’re trying to bring this down, focus on paying off the cards with the highest balances first. You can also ask for a credit limit increase (just don’t use the extra credit to spend more).
And remember, this factor doesn’t apply just to credit cards. It also looks at personal lines of credit and other types of revolving credit.
3. Length of Your Credit History
Another piece of the credit score puzzle is how long you’ve had credit. A longer credit history gives lenders more data to look at. They can see how you’ve handled different types of credit over time.
If you’ve just opened your first account recently, your credit history will naturally be short. That’s okay. Everyone has to start somewhere. But once you have accounts open, keep them active and in good standing. Don’t close old credit cards just because you don’t use them anymore—those older accounts help build your average account age.
This category doesn’t carry as much weight as payment history or credit usage, but it still matters. Time adds trust, and trust builds credit.
4. Your Credit Mix (Different Types of Credit)
Lenders like to see that you can handle more than just one kind of credit. Having only credit cards on your report is fine, but having a mix of different account types can be even better.
This is where things like auto loans, student loans, or a mortgage can help, even if they’re small. Installment loans (where you pay a fixed amount monthly) and revolving accounts (like credit cards) show lenders that you can manage different types of financial responsibility.
Again, this doesn’t mean you should go out and take on debt just to add variety. But if you already have different types of credit, that mix could work in your favor.
A lot of people overlook this one, but it makes a difference, especially if you’re trying to raise your score over time.
5. New Credit Activity (Too Many Applications Can Hurt)
Whenever you apply for a new loan or credit card, there will be a hard inquiry on your credit report by the lender. These inquiries are recorded and can slightly lower your score. One or two aren’t usually a big deal, but several within a short period might make lenders think you’re taking on too much credit at once.
Lenders might think you’re trying to borrow more than you can handle, which could make them hesitant to approve your application. It also makes you look a bit risky, especially if you don’t have a long history yet.
Be selective about when and why you apply for new credit. If you’re shopping for a loan or card, try to do your rate checks within a short window, like 14 to 30 days, so it only counts as one inquiry for scoring purposes.
Also, keep in mind that checking your own credit (a “soft pull”) won’t affect your score. That’s safe to do anytime.
Credit scores don’t stay the same forever. They change based on your behavior. That’s actually a good thing. It means that no matter where your score is now, there’s room to improve it over time.
Here’s a quick recap of what matters most:
- Always pay on time.
- Keep your balances low.
- Leave old accounts open if they’re in good standing.
- Try to have a mix of credit types.
- Don’t apply for too much credit at once.
Small changes—like setting up autopay or paying down a little extra each month—can help more than you think. It’s not about being perfect. It’s about being consistent.
Improving your credit score is totally doable. Just focus on the basics, be patient, and remember that every positive move counts.