The 5 Factors That Determine Your Credit Score: A Complete Guide

Introduction

Your credit score is more than just a number—it’s a key that unlocks financial opportunities and determines the terms you’ll receive when applying for loans, credit cards, and even rental properties. Understanding what influences this crucial financial metric can help you take control of your financial future and make informed decisions that will positively impact your score.

In the UK, credit scores typically range from 0 to 999, depending on which credit reference agency is calculating your score. While each agency has its own scoring system, they all evaluate the same five fundamental factors when determining your creditworthiness.

This guide breaks down these five essential components that make up your credit score, helping you understand exactly what lenders see when they review your financial profile.

1. Payment History (35% of Your Score)

Why It Matters

Your payment history is the most influential factor in calculating your credit score, accounting for approximately 35% of the total. Lenders want reassurance that you’ll repay what you borrow, and your track record of previous payments provides them with the best indication of your future behaviour.

What’s Included

• Payment records for credit cards, loans, mortgages, and other credit accounts
• Public records such as bankruptcies, County Court Judgments (CCJs), and Individual Voluntary Arrangements (IVAs)
• The severity, recency, and frequency of missed payments
• The number of accounts with positive payment histories

How to Improve This Factor

• Set up direct debits on your accounts to automatically cover your bills and repayments, helping you stay on top of your finances and ensuring you never miss a payment, avoid late fees, and maintain a healthy credit score.
• If you’re struggling to make payments, contact your lenders immediately to discuss options
• Use our Credit Card Repayment Calculator{:target=”_blank” rel=”noopener noreferrer”} to create a sustainable repayment plan
• For multiple debts, develop a structured approach with our Debt Payoff Calculator{:target=”_blank” rel=”noopener noreferrer”}

2. Credit Utilisation (30% of Your Score)

Why It Matters

Credit utilisation refers to how much of your available credit you’re currently using. It accounts for approximately 30% of your credit score. High utilisation rates suggest you’re overly reliant on credit, which may indicate financial stress to potential lenders.

What’s Included

• The outstanding balance on each of your revolving credit accounts
• Your total debt across all accounts compared to your total available credit
• The number of accounts with balances
• Individual utilisation rates for each credit card or line of credit

How to Improve This Factor

• Aim to keep your credit utilisation below 30% of your available credit
• Consider making multiple small payments throughout the month rather than one large payment
• Calculate exactly where you stand with our Credit Utilisation Ratio Calculator{:target=”_blank” rel=”noopener noreferrer”}
• Consider requesting credit limit increases on existing accounts (but avoid using the additional credit)
• Don’t close unused credit cards as this reduces your available credit and may increase your utilisation ratio

3. How Long You’ve Had Credit (Accounts for 15% of Your Credit Score)

Why It Matters

The duration of your credit history accounts for approximately 15% of your credit score. Lenders prefer borrowers with established credit histories as this provides more data to evaluate risk. A longer credit history demonstrates that you can manage credit responsibly over time.

What’s Included

• The age of your oldest credit account
• The age of your newest credit account
• The average age of all your accounts
• The age of your various credit accounts, such as credit cards, loans, and mortgages
• How actively you use your accounts

How to Improve This Factor

• Keep your oldest accounts open, even if you rarely use them
• If you’re new to credit, consider starting with a credit builder card or becoming an authorised user on someone else’s account
• Use our Credit Score Simulator{:target=”_blank” rel=”noopener noreferrer”} to understand how closing old accounts might affect your score
• Don’t open multiple new accounts in a short period as this reduces your average account age

4. Credit Mix (10% of Your Score)

Why It Matters

Your credit mix refers to the variety of credit accounts in your name and accounts for approximately 10% of your credit score. Demonstrating responsible management of various credit types is something lenders look for.

What’s Included

• Revolving credit (credit cards, store cards, etc.)
• Instalment loans (personal loans, car loans, etc.)
• Mortgages
• Finance agreements
• Overdrafts

How to Improve This Factor

• Don’t open new accounts solely for the purpose of creating a better credit mix
• If your credit history consists only of credit cards, consider adding an instalment loan when you genuinely need one
• Use our Loan Calculator{:target=”_blank” rel=”noopener noreferrer”} to determine affordable loan terms before applying
• If considering a mortgage, check what you can afford with our Mortgage Affordability{:target=”_blank” rel=”noopener noreferrer”} tool

5. New Credit Applications (10% of Your Score)

Why It Matters

New credit applications account for approximately 10% of your credit score. Multiple credit applications in a short period can signal financial distress to lenders, as it suggests you may be desperately seeking credit.

What’s Included

• Hard credit checks from applications for loans, credit cards, and other credit products
• The number of recently opened accounts
• The time since your most recent credit application
• How many new accounts you have relative to your established accounts

How to Improve This Factor

• Avoid making multiple credit applications in a short timeframe
• Research eligibility before applying to reduce the risk of rejection
• When shopping for specific loans like a mortgage, try to do so within a focused period (typically 14-45 days), as multiple similar applications may be treated as a single inquiry
• Use our Budget Planner{:target=”_blank” rel=”noopener noreferrer”} to assess whether you need additional credit before applying

Taking Control of Your Credit Score

Understanding these five factors gives you the knowledge to proactively manage your credit score. Remember that improvements don’t happen overnight—credit building is a marathon, not a sprint. Consistent, responsible financial habits over time will yield the best results.

To help you on this journey, our Credit Score Simulator can show you how different actions might affect your score before you take them, allowing you to make more informed decisions about your financial future.

Conclusion

Your credit score may seem complex, but breaking it down into these five key components makes it more manageable. By understanding how payment history, credit utilisation, length of credit history, credit mix, and new credit applications affect your score, you can develop targeted strategies to improve your creditworthiness.

Remember that financial well-being extends beyond just your credit score. Creating a solid budget with our Budget Planner and planning for the future with our Retirement Savings Calculator{:target=”_blank” rel=”noopener noreferrer”} are equally important steps toward comprehensive financial health.

By focusing on these five factors and using the right tools to support your financial journey, you’ll be well on your way to achieving an excellent credit score and the financial opportunities that come with it.