What Makes Up a Credit Score ?

What Is a Credit Score?

What Makes Up a Credit Score
What Makes Up a Credit Score

What Makes Up a Credit Score? Your credit score can mean the difference between being denied or approved for credit and a low or high-interest rate. A good score can help you qualify for an apartment rental and even help you get utilities connected without a deposit.
What is it?

Your credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. It’s designed to predict

What Makes Up a Credit Score?

t risk, specifically, the likelihood that you will become seriously delinquent on your credit obligations in the 24 months after scoring.


35% Payment history

This makes up about 35% of your score, so pay your bills on time. Missing a $4 payment on a credit card, for example, could be as bad as missing a $400 payment, so don’t skip the minimum payment. This also includes collections. Some creditors (even city parking ticket collectors) may report that you haven’t paid them to your credit bureau, or even use a third-party collection agency to get their money back. These collections on your credit bureau can lower your score. Always be aware of whom you owe money to—even if it’s just a parking ticket.


30% Utilization ratio

This is your level of indebtedness. This is how much of your total available credit you’re using. Try to keep your balance below 35% of your credit limit, and don’t ever go over 70%, even if you pay it off every month.


15% Length of credit

The longer you have an account open, the better. Think of it as a good track record. It shows you’re capable of managing credit as a responsible adult should.


10% Types of credit

It’s good to have a mix of different types of credit (revolving credit like credit cards and lines of credit are riskier than personal loans so it’s better to have fewer of those in your mix) to show that you can handle your payments.


10% Inquiries

These happen every time you agree to a “hard credit check” (not a soft check like we do when you open a MogoAccount). Hard checks usually happen even when opening a chequing account with a bank or a new phone plan.