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Credit scores have become a powerful thing that can affect your life in the most unexpected ways. Once upon a time, these credit scores were just used to determine whether or not a lender should accept your loan or credit request. Now, insurance agents also use them to decide about your insurance policies. In addition, some cable and utility companies have started checking your credit history (not the score) before they offer you new services. Last but not least, in most cases, your credit scores also play a significant role in establishing the interest rates you will pay.

With credit scores affecting your day-to-day activities, it’s now more important than ever to build and protect your credit score. Here are five crucial factors that influence your credit scores the most:

Monthly bills

Have you been paying all your monthly bills, or have you been slacking? Your bill payment history affects your credit score more harshly than you imagined. Your payment records affect your score by 35%, making it the most significant influencing factor. So severe bill issues like charge-offs, bankruptcy, and tax liens can destroy your credit score, and you may have an irreparable credit history. 

Paying off all your monthly bills in full and on time is essential in building your credit score & history.

Old debts

Credit score calculations such as FICO scrutinize a few key factors from your debts to determine your scores. As a result, it affects your credit score & history by 30%. Your credit score is determined after considering factors like your credit limits and the amount of credit you have used up (credit utilization ratio), the number of your current or previous debts, and the ratio of your loan balances to the total loan balance, etc.

Ideally, your credit utilization ratio should be 30% or less. Then, as you make the payments, your score will improve too.

How old is your credit history?

Credit histories affect your score by about 15%. Therefore, the average age of your credit accounts and the age of your oldest credit account are two important factors. Ideally, your credit accounts should be old, indicating that you have experience in handling debts and a history of repaying every debt. Hence, closing old accounts or opening too many new ones simultaneously is a bad idea.

Types of credits

The types of credits you have can affect your credit score by 10%. Ideally, you should have a good credit mix, meaning an equal number of closed-end and open-end credits to have a good credit history, but don’t sweat if your credit mix isn’t ideal. It’s only 10% of your credit score. 

Additionally, having large loans like home or auto loans can improve your credit mix if you have been making the repayments on time. It shows that you have experience with large loans and can be trusted to repay on time.

Credit inquiries

Every time you submit a loan or credit application, a hard inquiry is made about your credit history. These hard inquiries affect your credit scores by 10%. Inquiries don’t affect your score too badly, but if there are too many inquiries within a certain period, that makes you look bad and would be bad for both your credit score & history.

But the good part is inquiries made only in the last 12 months are reflected when a lender retrieves your credit history. And the soft inquiries are neither recorded in your history nor do they affect your score.


Your repayments significantly affect your credit history, but other factors can also affect your scores. However, if you are careful about the above-listed factors, you should be able to maintain a good credit score. 

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