Your credit score is a tool used by lenders and financial institutions to assess risk, essentially helping them decide how likely you are to repay borrowed money. Whether you’re applying for a mortgage, credit card, or even a rental, your credit score plays an important role in that decision.
That said, your credit score is only one piece of the puzzle. Lenders also consider factors like your income, employment, and overall financial stability when determining your creditworthiness.
What impacts your credit score?
Your credit score is calculated based on several key factors such as:
• Payment History (35%) – Your track record of paying bills on time. Late or missed payments can significantly impact your score.
• Credit Utilization (30%) – How much of your available credit you’re using. Lower usage generally reflects positively.
• Length of Credit History (15%) – How long your accounts have been active. A longer history shows experience managing credit
• Credit Mix (10%) – The variety of credit accounts you have (credit cards, loans, mortgages)
• Credit Inquiries (10%) – Applications for new credit may temporarily lower your score.
Payment History and Credit Utilization make up 65% of your credit score. That’s why it’s so important to make your payments on time and avoid using all of your available credit.