Which factor contributes to 30% of the credit score evaluation?

The factor that contributes to 30% of the credit score evaluation is utilization, specifically referred to as credit utilization ratio. This ratio measures how much of your available credit you are currently using. Ideally, it is recommended to keep this ratio below 30%, as a lower utilization indicates to lenders that you are not overly reliant on credit and are managing your debts responsibly. High utilization can negatively impact your credit score because it suggests that you may be at a higher risk of defaulting on your debts.

Understanding credit utilization is crucial for consumers looking to improve their credit scores. It reflects a balance between credit usage and available credit, showing lenders how much credit you are actively utilizing compared to how much is available to you. It is an important aspect of credit scoring models because it is directly tied to the likelihood of repayment—those who keep their usage low are generally seen as lower risk.

While other factors like credit history, payment history, and credit mix also play significant roles in determining a credit score, they each contribute different percentages and dimensions to the score. For instance, payment history plays a larger role, accounting for 35% of the score, and reflects how reliably a borrower has paid their debts in the past.