Actions that affect your credit score and tips for improving financial health

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How often does your credit score change? A credit score is based on the information in your credit report at one point in time and can change whenever your credit report changes.

It’s best to fully understand the categories that make up your score as well as how your everyday financial decisions can impact your score.

Your FICO® Credit Score is comprised of five categories: payment history (including any derogatory marks), amounts you owe, length of credit history, new credit and the types of credit you have. 1 The approximate percentages for these categories on the general population are listed below, but understand that the impact of each category on your FICO® Credit Score is based on your credit profile. A change in credit score can typically be tied back to financial behavior that influences one of these categories.

Payment History: Approximately 35%

If you have missed payments or made late payments—even just one—your credit score could potentially take a hit. For your FICO® Credit Score, payment history typically accounts for a significant 35% of your total credit score. A noticeable decrease in your credit score could be attributed to a “derogatory mark” on your payment history. Some major derogatory remarks impacting the credit score include bankruptcy, loans going to collections, tax liens or missed or late payments on multiple lines of credit. These marks can remain on your credit history for up to 10 years, but diminish in impact as time goes by.

Tip: Set up automatic bill pay on your account or elect to receive mobile and email alerts to remind you when an upcoming payment is due.

Amounts You Owe: Approximately 30%

 “Amounts owed” includes your indebtedness on all your accounts and the balances owed compared to the total amount of available credit available to you. Carrying more debt on your credit cards can have a negative effect on your credit score, which may cause it to drop. This category has one of the bigger effects, since it typically makes up 30% of your FICO® Credit Score. 1

Tip: You should try and pay down as much debt as possible and budget your accounts carefully. Having credit accounts with an outstanding balance does not necessarily mean you are a high-risk borrower. A long history of demonstrating consistent payments on credit accounts is a good way to show lenders you can responsibly manage additional credit.

Length of Credit History: Approximately 15%

The longer you’ve had accounts open, the more credible you appear to lending institutions. In general, consumers with a longer credit history will have a higher FICO® Score than consumers with a shorter credit history, all else being equal.   

Tip: Even people who have not been using credit long can get a good FICO® Score, depending on what their credit report says about their payment history and amounts owed.

Types of Credit: Approximately 10%   

Your mix of types of credit isn’t the most significant factor in determining your FICO® Credit Score, but it may be more important if you don’t have an extensive credit history on your credit report. While you don’t necessarily need one of every type of credit, a variety of credit accounts can demonstrate responsible credit use.

Tip: Don’t open credit lines you don’t plan to use.

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New Credit: Approximately 10%  

Another factor that can impact your FICO® Credit Score is the number of new credit lines you have recently applied for or opened. Research shows that opening several credit accounts in a short period of time represents greater risk – especially for people who do not have a long credit history. When a financial institution checks your credit report(s) as a result of your application for new credit, a hard inquiry is made to your report, which is then taken into account by the FICO® Credit Score. The FICO® Credit Score does not count any soft inquiries from employers or insurance companies, or any inquiries lenders make without your knowledge. And checking your own credit reports and scores will never affect your FICO® Score.

Tip: Do your rate shopping within a short period of time.  If you’re looking for a mortgage, student loan or an auto loan, you may want to check with several lenders to find the best rate. The FICO® Score typically accounts for this rate shopping behavior by treating multiple inquiries from auto, mortgage, or student loan lenders within a short period of time as a single inquiry. Because of that, it is best to do your rate shopping within a reasonable shopping period if possible.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries.

Discover Financial Services and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Discover Financial Services and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating. 

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