5 main credit score ingredients

TransUnion TransRisk. FICO®. VantageScore®. These are just some of the credit scores creditors may have at their disposal when they’re evaluating your credit. Which one (or ones) they use to help predict what kind of a borrower you’ll be is up to them—and each credit score flavor has its own secret recipe. While you can’t find out exactly how credit score creators craft those 3-digit numbers, you can familiarize yourself with the 5 ingredients most scores have in common.


1. Your payment history
You know how food packaging labels list the ingredients in the order their amounts are found in the food? For many credit scores, payment history is at or near the top of the ingredient list. And for good reason. Whether or not you’ve paid on time is pretty useful when it comes to figuring out whether you’ll be a responsible borrower. Accounts showing late payments or charge-offs, delinquencies, accounts in collection, bankruptcies, tax liens and many other pieces of payment data generally make their way into credit scores in some shape or form.

Nugget of wisdom: Pay your bills on time and pay off delinquent accounts as soon as possible.


2. Total debt
This is another big ingredient. Credit scores will generally factor in how much you owe across all your accounts. They’ll also look at your utilization rate. Even though it sounds like those hard-to-pronounce food ingredients, it’s neither harmful nor too complicated. Your utilization rate is how much credit you’re using compared to how much is available to you. So if your credit limit is $10,000 and you’re using $1,000, your utilization rate is 10%. Scores will generally get into all sorts of other details about how much you’re borrowing, things like how many accounts you have, how much you owe on installment accounts versus credit card accounts, etc.

Nugget of wisdom: Don’t overextend yourself—only take out debt you can comfortably pay off.


3. Credit history length
This credit score ingredient is pretty straightforward: how long have you been using credit? Credit scores typically factor in how far back your first account was opened and the average age of all your accounts.

Nugget of wisdom: Think twice about closing accounts. We’re not saying closing accounts is bad, but just be aware that if you’ve had the account open for a long time and you close it, your credit score may take a dip.


4. Inquiries
When you apply for new credit, the creditor will almost always pull your credit report when evaluating your application. That credit report request to a credit bureau is known as a hard inquiry. Credit scores tend to incorporate how many recent hard inquiries you have on file. The idea is this: if you’ve applied for credit a lot within a short period of time you may be struggling to get credit.

Nugget of wisdom: Be conscious about how often you’ve been applying for new credit. Credit scores will generally take a hit if you apply too often within a short period of time.


5. Variety of accounts
This ingredient usually plays a small role in the crafting of a credit score, but it’s usually in there. Creditors like to know that you can handle paying a variety of different kinds of accounts. So you may get a small boost when you establish a different kind of credit account—installment loans vs. revolving, for example—and start making regular payments on time.

Nugget of wisdom: Don’t go buy a car or take out a mortgage just for your credit score’s sake. But if you’re at that point in your life, you’re financially ready and your credit’s the same in all other respects, branching out may give your credit scores a small positive nudge.


Credit scores are really just different takes on your credit health. So while you can’t control how credit scores are calculated or which ones are used, you can control your borrowing, payment and debt management habits. Because whether it’s what you eat or what your credit score is, healthy ingredients make for a healthier product and a healthier consumer.


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