What Factors Affect Your Credit Score

Knowing what factors affect your credit score is very important. This three-digit number is used to evaluate whether or not you get approved for a credit card or a loan and at what interest rate.

credit score

Here are the main factors that affect your score:

Payment history

Your payment history accounts for 35% of your credit score. It is one of the most important factors.

Delays in payments can have a big negative impact on your credit score. It varies whether you pay your balance with a 30-day delay or with a 60-day delay. The longer you wait the greater the impact on your credit.

Other factors can also affect your payment history, such as debt settlements, bankruptcies, lawsuits, liens, among others.

Credit usage

It is 30% of your credit score. Improving your credit usage is one of the easiest ways to quickly boost your credit score.

Credit usage is determined by the amount of the total available credit used. The amount you owe on things like mortgage, loans and credit cards is also taken into account.

However, the most important factor is your current credit utilization rate. It measures how much debt you have compared to your available credit limits. Specialists say that a lower utilization rate is better for your credit score.

Leaving part of your balance unpaid or maxing out your credit card can hurt your score by increasing your utilization rate.

Age of Credit History

Your age of credit history is 15% of your credit score. Older credit histories are better for your score because that usually proves that you have more experience with handling credit.

Opening new accounts in a short amount of time can hurt your score, because this could lower your average age of accounts, and that may reduce your score.

Experts don’t recommend closing old accounts since they can stay on your credit reports for up to 10 years and increase the average age of your accounts.

Types of Credit

This consists of 10% of your score. If you have revolving accounts and installment loans, for example, usually means that you have more experience dealing with different types of credit. This may help improve your credit health.

Credit Inquiries

Every time that you apply for something that requires a credit check, an inquiry is placed on your credit report. Credit inquiries can stay on your reports for up to two years.

Many hard inquiries in a short amount of time can hurt your credit score even if you don’t get approved for the credit card or loan. If your credit history is new, a hard inquiry can have an even greater impact.


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