What Are The Factors Affecting Credit Score
                     What Are The Factor
s Affecting Credit Sco
re?
The credit score is defined as 
the material interpretation of 
borrowing capacity. It is a 
number used by the companies 
to check if they should give loan. 
If yes, then at what APR. Let’s 
check 5 factors which directly 
affects credit score: 
Maintaining Utilisation Ratio:
People who want to quickly improve their credit score 
should not use more than 30% of the credit. For example, if 
the credit limit is $1,000 then the ideal usage is of $333. 
Using 30% of the credit helps in keeping the utilisation ratio 
low. Increasing usage can start affecting the credit score. 
Instead of Increasing usage, people can use multiple cards. 
This way they can avail benefits from the unlimited cash 
back by green dot. Now, regions secured credit card 
provide a low credit limit. Thus, users have to figure out 
where they can use 30% of the credit. This usage can be 
achieved by paying for rides. People can also pay to 
companies like Lyft with their fit MasterCard. 
Note: do prepaid cards work for Lyft?
Yes, the company accepts all the major Credit cards like fit credit card. 
They accept prepaid cards also. However, users can also pay through 
applications like Google pay or PayPal. These services are limited to 
android and iOS users. Users can verify this thing by checking out credit 
card reviews. For example, if an individual is having a first progress 
credit card then he can check 
first progress platinum MasterCard reviews.
Credit ratio is calculated by dividing the total credit used by 
the total available credit or credit limit. 
2)Payment history: Payment history is one of the most 
important factors affecting the Credit score. It constitutes 
35% of the credit score. However, payment history can only 
be Improved with time. A user has to follow a very 
disciplined routine of timely payments. The reason being 
why it is the most crucial factor in deciding Credit score is 
that lenders only want users who can return their money. 
That’s why users have to pay APR (annual percentage rate) 
after delaying payments.
Length of credit 
history:
For how long the user is using a credit 
card is considered as the length of 
credit usage. This constitutes about 
15% of the credit score. In this, all 
Credit Accounts are considered. A 
longer credit history helps in keeping 
the credit score high. This also 
signifies that a user is handling debt 
for a long time. Accordingly, he can 
manage the debt in future. That’s 
why it is advised a user should never 
close his oldest credit account even if 
he is not using it.
New Credit or New Applications
This factor constitutes 10% in making of credit score. Lenders 
are interested in checking how many different borrowing 
accounts the applicant is having. They also want to know 
when the last account was opened. Whenever an applicant 
submits a new application for purchasing credit card, a hard 
inquiry takes place. In this enquiry, the credit information is 
checked. This hard enquiry affects the credit score. For 
example, if an individual has recently opened an account and 
within a few days, he is applying for a new card. This signifies 
that he is using multiple accounts. Accordingly, the risk of 
expecting cash problems from him Increases. In short, credit 
risk Increases.
 
Here the borrowing capacity in comparison to the total 
income is also checked. If total income is greater than the 
borrowing capacity then lenders can accept the application. If 
borrowing capacity is more than the total income then 
application is simply rejected. 
Credit mix: This factor also constitutes about 10% of the 
credit score. Lenders are interested in checking if the 
applicant is capable of handling different types of debt. 
People who are having excellent credit are capable of 
handling multiple debts. This factor doesn’t affect a lot but if 
all the factors discussed above are negative then this one can 
play a crucial role.
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