Credit Scores 101: What Impacts Yours and How to Improve It

Your credit score is more than just a number—it’s a key financial indicator that can affect everything from loan approvals to interest rates and even insurance premiums. Understanding how your score is calculated, and the factors that influence it, is the first step toward stronger financial health.

At St. Johns Bank, we believe informed banking leads to empowered decision-making. Let’s take a closer look at what drives your credit score and why it matters.

What Is a Credit Score?

A credit score is a three-digit number, typically ranging from 300 to 850, used by lenders to assess your creditworthiness. The higher your score, the more likely you are to be approved for loans, credit cards, or mortgages with favorable terms.

Credit scores are calculated using models like FICO® or VantageScore®, and they draw data from your credit report, including payment history, amounts owed, and more.

Key Factors That Affect Your Score

Credit scoring models evaluate several components, with each playing a different role in determining your final number:

1. Payment History (35%)

Consistently paying your bills on time is the most significant factor in building good credit. Late or missed payments can lower your score and remain on your report for up to seven years.

2. Credit Utilization (30%)

This refers to the percentage of your available credit that you're using. A lower utilization ratio—generally under 30%—is considered ideal.

3. Length of Credit History (15%)

The longer your credit history, the better. Lenders like to see a track record of responsible credit use over time.

4. New Credit Inquiries (10%)

Each time you apply for credit, a hard inquiry is made, which can slightly reduce your score. Multiple inquiries in a short period can be a red flag to lenders.

5. Credit Mix (10%)

Having a variety of credit types—such as credit cards, installment loans, or a mortgage—can have a positive effect on your score.

For more detail on this, visit Equifax's guide to credit mix.

Why It Matters

Your credit score affects whether you qualify for a loan, what interest rates you’ll receive, and in some cases, your ability to rent a home or get certain jobs. A stronger score can save you thousands over time.

According to Experian, the average U.S. credit score in 2024 was 715—a benchmark that lenders often consider “good.”

Take the Next Step Toward Financial Confidence

At St. Johns Bank, we’re committed to helping you reach your financial goals with personal guidance and trusted tools. Whether you're applying for a loan or opening a new account, we’re here to support your journey.

Visit our website to explore our full range of banking services and speak with a representative today.