What Factors Influence Your Credit Score?
Your credit score determines whether you qualify for that car loan, mortgage or credit card, in addition to what interest rate you’ll pay. It’s an inextricable part of the car buying process. At PA Auto Credit, we help Pennsylvania drivers understand what factors influence your credit score and take control of their financial future. These are the five key elements that shape this three-digit number.
On-Time Payments
Payment history is the single most influential factor in your credit score, comprising about 35 percent of your score. Making payments on time shows lenders you’re reliable and helps build long-term credit strength. Even one missed payment can cause a noticeable dip and may take months to recover from.
Credit Utilization
The amounts you owe comprise 30 percent of your credit score. This ratio compares your current credit card balances to your total available credit limits. It’s recommended to keep this ratio below 30 percent, but people with the highest credit scores tend to have it as low as 5 percent.
Length of Credit History
Credit history length makes up 15 percent of your score. This factor considers the age of your oldest account, newest account, and average age across all accounts. Even people without long credit histories can achieve excellent scores through consistent on time payments and low utilization.
New Credit Applications
Opening multiple accounts quickly represents higher risk and impacts 10 percent of your score. Lenders view multiple new accounts as a sign you may be experiencing financial difficulty. Hard inquiries can build up, though rate shopping for auto loans within a focused period typically counts as a single inquiry.
Credit Mix
Your credit mix accounts for the final 10 percent of your score. This factor examines the variety of account types you manage, from credit cards to installment loans to mortgages. Successfully handling different credit products shows lenders you understand various repayment structures and can manage diverse financial obligations responsibly.