The Big Five Factors That Shape Your Credit Score

Understanding how credit works can seem complicated, but it really comes down to five simple factors.

In this week’s Credit Conversations, we caught up with John Simpson, CEO of RentReporters, to talk through the Big Five factors that shape every credit score and how to make them work in your favor. Drawing on years of helping renters nationwide, John breaks down what matters most, what doesn’t and how to make credit work for you.

Pay Your Bills on Time

It sounds simple, but nothing affects your credit more than payment history. 

“The number one thing is paying your bills on time,” John says. “You don’t have a fighting chance if you’re not doing that.”

Consistency shows lenders you’re reliable. If you ever miss a payment, timing is everything.

“You’re not considered late until you’re 30 days past due,” John explains. “Once you realize you missed it, pay it right away and call your bank. Most will forgive the fee if you have a good track record.”

Still, even a short delay can trigger interest charges. “So don’t just be a victim,” he adds. “Advocate for yourself and avoid paying more than you have to.

Build History and Start Early

The second major factor is the length of your credit history and the sooner you start, the better.

“The longer you’ve had your accounts open, the more reliable you look,” John says. “For young people, that means getting started sooner rather than later, because you can’t start building history until you have one.”

If you’re new to credit, start with a basic credit card, ideally through your bank, and request small credit limit increases over time. “It’s a great way to strengthen your profile,” he says. “The higher your available limit, the better your credit usage looks.”

Keep Your Utilization Low

Credit utilization, how much of your available credit you’re using, is one of the most misunderstood factors.

“Less is better. More is worse,” John says plainly. “You want to stay around one-third of your available credit.”

Even if you pay your balance in full each month, your score can dip if your usage is high when the statement closes. 

“That’s the number the credit bureaus see,” John explains. “If you’ve had a heavy spending month, pay part it early before the statement date, so it shows up as a lower balance.”

John admits he’s learned that lesson firsthand. “I pay off my cards every month, but since I put business expenses on them, my score still drops sometimes. Now I just pay it down before the statement hits so my report looks the way it should.”

Diversify Your Credit Naturally

Credit mix, or the variety of credit accounts you have, also plays a role. Lenders like to see you can manage different types of debt responsibly.

“Don’t take on new debt just to make your score look better.” John says. “Start with a card, live your life, and as you naturally add things like an auto loan or a mortgage, the variety will come.”

“It’s not about quantity, it’s about consistency,” he adds. “You don’t build credit by borrowing more. You build it by managing what you already owe.”

Be Selective About New Credit

Finally, how often you apply for new credit matters. Too many applications at once an make lenders nervous. 

If you’re suddenly trying to open a bunch of credit cards, lenders are going to wonder what’s going on,” John explains. “That’s going to work against you.”

Checking your own credit (a soft pull) won’t hurt your score, but applying for new accounts (a hard pull) will.

Store credit cards are another common pitfall. They promise instant discounts but often come with high interest rates and low limits.

“I had a few when I was younger,” John says. “They make you feel like you’re saving, but really they encourage unnecessary spending. Focus on one or two quality cards you can manage well.”

The Bottom Line

Credit scoring isn’t mysterious. It rewards consistency and self-control.

“If you’re paying on time, keeping your balances low, and not opening too many accounts, your score will take care of itself,” John says.

For young adults especially, he offers this reminder:

“Credit is not about buying things you can’t afford. It’s a tool to build your financial foundation. Use it the way you’d use cash. Thoughtfully and responsibly.”

Key Takeaways

• Always pay on time: It’s the single most important factor in your score.
• Start early: Your credit history doesn’t begin until you open your first account.
• Keep balances low: Try to stay under one-third of your available credit.
• Let your mix grow naturally: Don’t take on new debt you don’t need.
• Be selective: Too many new applications can lower your score.

Already paying rent? Make it count. RentReporters will help you add your rent to your credit report so you can build the payment history lenders want to see. 

Check out the full podcast with John HERE!