The following are factors that affect your credit scores:
Payment history (35%): This is one of the most essential ingredients in credit scoring. Delayed payments or missed payments can impact your scores greatly. Lenders want to ensure you'll make your payments and on time when they are considering you for new credit. Your payment history makes up 35% of your credit history.
Debt-to-credit utilization (30%): The credit utilization ratio determines this. This ratio shows how much credit you use compared to your credit limit. It is important to keep this number under 30% ie use only 30% of your credit limit. For example, if your credit limit on a credit card is $5000, you'll want to use no more than $1500 of that credit card limit. Using any amount above that will hurt your scores significantly. It is essential to pay your credit balances down to 30% utilization of the credit limit. Your Debt-to-Credit utilization makes up 30% of your credit report.
Length of credit history (15%): This shows how long you have had your credit accounts. This is beneficial because it shows your track record of being a responsible credit user. The longer your credit accounts the higher your credit scores. The length of credit history makes up 15% of your credit score
Credit mix (10%): Carrying a diverse type of credit account like a car loan, student loans, store credit cards or credit card loans, installment loans shows your ability to manage different kinds of credit products. Your credit mix accounts for 10% of your credit score.
New credit accounts (10%): Opening several new credit card accounts within a short period of time and hard inquiries represent a greater risk to the lender and can hurt your score. Avoid applying for new credit cards if you're about to buy a home. Each time you open a new credit line, the average length of your credit history decreases (further hurting your credit score).