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What Factors determine your credit score?
Each Monday Miles has decided to drop a tip, hint, tutorial, trick that maybe you’ve missed or haven’t heard before. If you’re an expert in this field, some of these may be things you already know, but there are a lot of beginners out there who are just getting their feet wet. This week the Monkey Miles Monday Memo: What factors determine your credit score?
5 Factors determine your credit score
- New Inquiries
- Payment History
- Utilization
- Length of Credit ( average age of card accounts)
- Types of Credit
These different factors affect your credit score in different ways
New Inquiries have little impact
These are hard inquiries where they pull your score from an agency. Depending on where you live, a different agency provides your report. My experience has been that a new inquiry drops your score about 3-5 points. My score typically pops back within 3 months. They drop off your report after 2 years.
Payment History and Utilization are big time factors
Simply put this means:
- Have you paid your bills on time?
- How much of all the credit available to you do you use?
As you can see from the table above these two factors account for roughly 2/3 of your score. THAT IS MASSIVE. It makes sense though when you think about it. Credit card Issuers want to know that you’re going to pay your bills, and keep an eye on the amount of your credit you’re using. If you’re racking up debt, the odds increase that you won’t be able to pay it off even if you’re paying those bills on time. If you’re wondering how utilization affects your credit in just one month…check out my story. Hint…it was dramatic.
Types of Credit has little impact
Have you had a car loan? Apartment Lease? Auto Lease? Home Loan? Credit cards? The more and different types of credit that has been extended to you and paid off, the better your score will be. Makes sense, right? Lenders want to see proof that you’re a reliable borrower.
Length of Credit has medium impact
How long have you been a borrower? Add up all of your account ages and divide by the number of accounts. That’s your average length of credit. This is the biggest reason you should keep a couple no fee cards open. This will help you ‘average age’ or your ‘length of credit.’ JSYK Accounts that have been cancelled stay on your history for 10 years.
FYI…I use CreditKarma to keep an eye on mine. As you can see from the Featured Image…Miles LOOOOOOVES his cards. He’s earned Millions this way 😉
*Keep your credit healthy and don’t overextend yourself. Points are interesting, but not worth the interest.
Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
Chase Sapphire Preferred® Card
Welcome Offer
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
Annual Fee
$95
Points Earned
Transferrable Chase Ultimate Rewards
- 5x on all travel purchased through Chase Travel℠
- 3x on dining, including eligible delivery services for takeout & dining out
- 3x on select streaming services
- 3x on online grocery purchases
- (excluding Target, Walmart and wholesale clubs)
- $50 Annual Chase Travel Hotel Credit via Chase Travel℠
- The begins immediately for new cardmembers and after your account anniversary for existing cardmembers
- 2x on all other travel
- 10% Anniversary Bonus
- Every year you keep the card, your total spend will yield a 10% points bonus. If you spend $10k in a year, you’ll get 1k bonus points
- Chase Sapphire Preferred continues to redeem at 1.25c in the Chase Travel℠ and the slew of other benefits remain in tact including Auto Rental Collision Damage Waiver ( primary ), purchase protections, etc.
- Points are transferrable to 14 Ultimate Rewards partners
- Redeem in Chase Travel℠ for 1.25 cents per point
- No foreign transaction fees
- Suite of Travel and Purchase Coverage
- Auto Rental Collision Damage Waiver is my favorite
- Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2027.
- $95 Annual Fee
We keep an up to date spreadsheet that lists the best ever offers: You can find that spreadsheet here.
Historically 80k is a very, very good offer and hit in both 2022 and 2023. In 2021, we saw the offer hit an all time high of 100k. Who knows if that will ever come back.
Main Cast:
Cards that earn flexible points and should be used on the bulk of your purchases.
Supporting Cast:
Cards that earn fixed points in the currency of the airline/hotel and can not be transferred at attractive rates. These cards yield benefits that make it worth keeping, but not necessarily worth putting a lot of your everyday spend on.
The Chase Sapphire Preferred® is exceptional starter card and offers transferrable Ultimate Rewards, and pairs well with other Chase cards.
If you carry this card alongside Chase’s cashback cards like the Chase Freedom Flex® and Chase Freedom Unlimited® or the business versions: Ink Business Cash® , Ink Business Unlimited® you can combine the points into Preferred account and transfer into hotel and airline partners
Annual fee is quite low at $95 a year + you get a 10% anniversary bonus on points + $50 hotel credit in Chase travel.
The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.