How Does Your Credit Report Affect Your Credit Score?

Your credit score is based on an algorithm that takes the information found in your credit report and reduces to a number.

Your credit history is the basis for your credit score, and it is important that the information in your credit report is accurate — and positive. Negative information in your credit report will bring down your credit report, and it could cost you money.

Sexy stuff, right?  But you need to know about them.  Below you will see how your credit report affects your credit score.  Understanding this is key to making sure you have a great credit score and get the best rates on loans as well as better rates on insurance and more.

What Effect Does Your Credit Report Have on Your Credit Score?

Credit scoring models are proprietary, but it is still possible to get a general idea of how the information in your credit report affects your credit score.

All of the information in your credit report is assigned a value.  For the purpose of the FICO score (a model that many other models are based on), the information in your credit report is lumped into five different areas:

1) Payment history

credit report and your credit score

What’s in your credit report directly affects your credit score.

This is the most valuable category of information in your credit report, accounting for 35% of your credit score.  Items in this category include late payments, missed payments, foreclosures, bankruptcies and more.

Items in your payment history are weighted and assigned values that can be used in the credit scoring algorithm.

2) Credit utilization

How much credit you are using accounts for 30% of your credit score.  This includes how much of your available balances you are using, and the number and sizes of your credit accounts.

3) Length of credit history

15% of your credit score is based on how long you have had credit, and the average age of your credit accounts.

4) Types of credit accounts

Different types of credit accounts are weighted in the model that determines your credit score. This includes revolving vs. installment credit, as well as where you have credit, such as payday loan providers and major credit card issuers. Types of credit accounts for 10% of your credit score.

5) New credit

The final 10% of your credit score includes new credit.  This includes new credit accounts, as well as hard inquiries into your credit.  Hard inquiries are when you apply for new credit of some type and the company pulls your information.

It’s All Mixed in the Credit Score Cauldron

All of the information in your credit report falls into one of these categories and is assigned a numeric value, weighted according to how important the credit scoring model considers the item.

Even within the categories, different items that appear on your credit report are weighted differently.  Once that is done, an algorithm is used to reduce all of that information down to the single number represented by your credit score.

Realize, though, that you can see different credit scores too (yes, it gets a bit more confusing but stay with me).  Your credit score is based on the information in a specific credit report, and the scoring model used might be a little bit different.

The FICO score is a good example.

There are different versions of the FICO score, which emphasize different aspects of the information in your credit report.  Additionally, each credit bureau has its own score, based on information in the specific credit report.


The exact algorithms or scoring models used are mostly proprietary, so exactly weighting information isn’t available.  However, if you make the effort to ensure that information in your credit report is accurate and positive, you are likely to have a good credit score — no matter which scoring model is used.




Published or updated August 9, 2012.

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