Credit Tips
Understanding how credit works is the first step toward improving your score and securing better financing.
What Makes Up Your Credit Score?
Payment History (35%)
On-time payments are the most critical factor in your score.
Key Factors
- Payment History: 35%
- Credit Utilization: 30%
- Account Age: 15%
- Credit Mix: 10%
- New Credit: 10%
Payment history is the most significant factor in your credit score calculation. It tracks whether you've paid past credit accounts on time.
Why It Matters
Lenders want to know if you've made payments on time in the past, as this is the best predictor of future payment behavior.
What Affects Your Payment History
- Late payments (30, 60, 90+ days late)
- Missed payments
- Accounts in collections
- Bankruptcies, foreclosures, repossessions, or charge-offs
- Consistent on-time payment history
Tips to Improve
- Set up automatic payments for at least the minimum amount due
- Use calendar reminders if you prefer to pay manually
- Contact creditors immediately if you know you'll miss a payment
- Request a "goodwill adjustment" for one-time late payments if you have an otherwise good history
Time Impact
Late payments impact your score less over time. A 30-day late payment from 5 years ago affects your score much less than one from last month.
Credit Scenarios
Scenario: Buying a Car with Different Credit Scores
+Scenario: Missing a Payment
+Scenario: Maxing Out Credit Cards
+Test Your Credit Knowledge
Take this quick quiz to test your understanding of credit factors and their impact.
Question 1: What percentage of your FICO score is determined by payment history?
15%
25%
35%
45%
Question 2: What credit utilization ratio is generally recommended for a good credit score?
Under 10%
Under 30%
Under 50%
Under 70%
Question 3: How long does a late payment typically stay on your credit report?
1 year
3 years
5 years
7 years
Question 4: Which of these actions typically has the most negative impact on your credit score?
Opening a new credit card
Checking your own credit score
Applying for several loans in a short period
Paying off a loan early
Question 5: What's the best way to improve a low credit score?
Close unused credit cards
Pay off all debt at once
Consistently make on-time payments
Apply for new credit to increase available credit