Your credit score is calculated using several key factors that reflect how you use and manage credit over time. Learn about the 6 factors from the VantageScore 4.0 model - the industry-standard credit score - and how much each factor influences your credit score.
Understanding these factors can help you make informed decisions and focus on the actions that have the biggest impact on your score.
1. Payment History (41%)
How consistently you pay on time
Payment history has the greatest impact on your credit score. Late or missed payments can lower your score, especially if they’re recent. They stay on your credit report for up to seven years, but their impact fades over time.
How Perpay+ helps
When you shop the Perpay Marketplace with your Spending Limit, on-time payments improve your payment history.
These small, regular payments can build a streak of positive history over time.
Perpay payments come directly from your paycheck, so you never have to stress about missing payments.
Tips
Perpay’s automatic direct deposits help avoid missed payments.
Even one late payment can have a long-lasting impact.
Using Perpay+ without making Marketplace purchases will not build payment history, but it helps with other factors, like your credit mix, credit utilization, and available credit.
2. Age & Type of Credit (20%)
Your credit mix and account age
This factor looks at how long you’ve had accounts open and what types of credit you use. A healthy mix of credit cards, installment loans, shopping accounts, and more shows lenders you can manage more than one kind of account.
How Perpay+ helps
Perpay+ adds a new trade line to your credit report.
The longer this account stays open, the better it is for your credit score.
Tips
It takes time for your credit profile to mature - keeping your lines of credit open will increase your average credit age over time.
Opening several new accounts at once can temporarily lower your score.
Older accounts are valuable - avoid closing them unless absolutely necessary.
Occasional small purchases on older cards can help keep them active.
3. Credit Utilization (20%)
Amount used of total available credit
Utilization measures how much of your available credit you’re using across your accounts. High utilization signals risk and can bring your score down. Experts suggest staying under 30% utilization if possible.
How Perpay+ helps
Perpay+ reports your Spending Limit, even if you don’t use it! If you have zero utilization of your Spending Limit, this can lower your overall utilization.
When you shop the Perpay Marketplace with your Spending Limit and keep a low utilization, you can improve this factor over time.
Positive repayment history on the Perpay Marketplace can lead to increases in your Spending Limit - up to $3,500 - which can further lower your overall utilization.
Tips
Avoid maxing out credit cards and high utilization on your open accounts.
Pay down balances before your creditor reports to the bureaus to lower the utilization they are reporting.
When shopping the Perpay Marketplace, keep an eye on your utilization. Perpay+ can help, but maxing out any line can still have a negative impact.
4. New Credit (11%)
New accounts and hard credit checks
New credit looks at how often you open new accounts and how recently you’ve done so. Opening a new account can be helpful, but doing it too frequently can lower your score.
How Perpay+ helps
Enrolling in Perpay+ creates a new trade line without a hard credit check through Vantage or FICO.
This gives you the benefit of new credit without the drawback of a hard credit check.
Tips
Opening several new accounts at once can temporarily lower your score.
New accounts are normal - just pace them out, and remember the benefits of your oldest credit lines!
5. Balances (6%)
How much you owe on all accounts
Balances reflect how much you owe across all credit accounts, beyond just your utilization. High total balances can affect how risky lenders think you are.
How Perpay+ helps
When you shop the Perpay Marketplace, you make small direct deposit payments over time, helping to prevent a spike in your balance.
Perpay+ reports shrinking balances as you pay down any Perpay Marketplace orders, which helps show positive progress.
Tips
Even if payments are on time, high total balances can still lower your score.
Avoid taking on more debt than you can comfortably pay off.
Consistently paying down debt over time is one of the best ways to improve your score.
Paying the minimum requirement will count towards on-time payments, but paying beyond the minimum will keep your balances lower.
6. Available Credit (2%)
Unused credit across accounts
This factor measures how much credit you have available in total across revolving credit accounts. The more credit you keep unused, the better you’ll score in this factor.
How Perpay+ helps
Since Perpay+ reports your Spending Limit, this increases your total available credit.
Making on-time payments on Perpay Marketplace purchases can lead to increases in your Spending Limit - up to $3,500 - and, in turn, your total available credits
Tips
Increasing credit limits responsibly can help your score.
Open accounts in good standing with unused credit can help.