Beginner’s Guide: What Factors determine your credit score?

Miles Credit Cards

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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

  1. New Inquiries
  2. Payment History
  3. Utilization
  4. Length of Credit ( average age of card accounts)
  5. Types of Credit

These different factors affect your credit score in different ways

What Factors determine your credit score

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.



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The Chase Sapphire Preferred is a great starter card that earns Premium Ultimate Rewards that can be transferred into over a dozen partners many of which are US based. 

Welcome Offer

60k Points after $4k spend in 3 months

80k offer in branch currently – I think this should be online soon

Annual Fee


Points Earned

Transferrable Chase Ultimate Rewards

Super solid welcome offer.

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.

  • 3x on dining
    •  including eligible delivery services for takeout
  • 3x on select streaming services
  • 3x on online grocery purchases
    • (excluding Target, Walmart and wholesale clubs)
  • 5x on all travel purchased through Chase Ultimate Rewards – Chase Travel Portal
  • $50 Annual Credit on hotel stays purchased via Ultimate Rewards/Chase Travel
    • The begins immediately for new cardmembers and after your account anniversary for existing cardmembers
  • 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 Portal and the slew of other benefits remain in tact including primary rental car insurance, purchase protections, etc.
  • Points are transferrable to 13 Ultimate Rewards partners
  • Redeem in the Chase Travel center for 1.25 cents per point
  • No foreign transaction fees
  • Suite of Travel and Purchase Coverage
    • Primary rental car coverage is my favorite

There is currently an 80k offer after $4k spend in 3 months available in branch, and up to 90k after $6k spend in 6 months. I suspect some version of this will be online soon if you don’t want the hassle of going into a branch.

We keep an up to date spreadsheet that lists the best ever offers: You can find that spreadsheet here.

Historically 60k is a very, very good offer. 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. 


  • DaninMCI July 6, 2021

    Type of credit can have an outsized negative impact on your scores. For example having a Kohl’s card instead a Visa card can hurt your score more than you’d think.

  • […] credit score going up because of your deeper level of credit, and lower utilization percentage ( read this to get deeper into how your credit score works). Several years ago, you could sign up, hit the min spend, get your bonus, cancel, rinse and […]

  • […] and thus, increases the percentage of credit you use every month. That percentage is one of the 5 factors that determine your credit score called utilization ( we have a whole memo on it if you’d […]

  • […] recently wrote a Monkey Miles Monday Memo that illustrated the 5 factors that impact your credit score. You will have a different score from […]

  • […] do I really have to lose? A pull? That will only drop my credit score a handful of points, and I’m only going to have this one last shot at 100k. I’ll fall under 5/24 in June […]

  • Kate March 7, 2017

    One thing I am confused about is credit utilization. Every now and then I try to pay a few bills before they come due. So I assume, if I don’t charge anything else, that utilization posts as 0. But what happens if I receive a bill,and pay it immediately, then does that promptly go to 0 or does it stay there for a billing cycle? Thanks!

    • Miles March 7, 2017

      Hey Kate – great question. I’m not sure if you’re aware of this or not, but the reports that we can access either through a credit card perk or creditkarma are FACO scores not FICO scores. Meaning, they are approximations and not the exact, real-time, scores that someone pulling your report will see as your FICO score. With that being said, my creditkarma score is what I use. It updates weekly, and my experience was that once the bill was paid, it updated and bounced back by the next updated score. If you’re going to make purchases that raise your Util over 10% and you need your report to not get a temporary hit because you’re buying something and need the best interest rates…pay it before the statement closes. If your Util stays under 10%, in my experience (, there won’t be a huge effect. Although, I will note, my score plunged when the Util of one bank’s line skyrocketed, not the overall %. Hope this answers your question.

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