Last Updated on Jun 9, 2023 by James W

Credit scores show whether lenders can trust that you will pay them back. Most lenders look at FICO scores, which take five factors into consideration. Knowing how your credit history affects your loan applications can help you improve your score before you apply for loans in Utah. Pay close attention to these five factors so your credit score gets into the highest range. 

Payment History

The most important factor in your credit history is your payment history. It encompasses 35% of your credit score and shows lenders that you pay your debts. The score involves a handful of factors including late payments. 

You will be penalized for paying 30, 60, or 90 or more days late. If your accounts have gone to collections, then your score will be lower. Your payment history will also be affected by debt settlements, bankruptcies, and other legal issues that become public record. You will have to wait for years for those items to fall off your credit score. Your credit score will also be impacted more by repeatedly missing payments rather than missing one large payment. 

Balances Owed

The second largest factor affecting your credit score is the amount owed to lenders. This factor encompasses 30% of your credit score. Lenders look at how much available credit you’ve used, so you don’t want to max out your credit cards. The score is also affected by the amounts you owe on installment accounts like mortgages and auto loans. Your score involves the total you owe compared to the original amount and open amounts on loans and credit cards. 

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Credit History

Only 15% of your credit score is based on your credit history. Lenders like to see that you’ve used credit successfully for a long time, but only if you haven’t had late payments or other problems. Many finance experts recommend leaving credit cards open, because they increase your credit history. If you close old accounts, your credit score could fall. 

New Credit

Having too much new credit can lower your score, but not by much as it only accounts for 10% of your credit rating. This part of your score evaluates your newest accounts, how many you have, and when you opened them. When you apply for credit, lenders do a hard credit check, which officially looks at your credit score. Soft credit inquiries do not require full credit checks, so your score stays higher. Every hard pull will lower your score, but only for a short time. Lenders worry when you open too many accounts at once, or have too many credit pulls in a short amount of time. 

Types of Credit in Use

Finally, FICO uses your types of loans for the final 10% of your credit score. Credit scores tend to be higher when borrowers have loans, credit cards, mortgages, and store accounts. However, if you have too many in all categories, you could have a lower score. If you don’t have a balance of types of credit, don’t worry about adding more credit, as you’ll end up with a lower score. 


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