What Factors Affect My Credit Score

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By : Admin
Credit Report 15/11/2017 12:48pm
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Checking credit score helps the lender to determine the level of risk involved in lending money to a borrower. Auto dealerships, banks and credit card companies are some of the lenders that check the credit score ahead of deciding on the amount of money and the interest they are willing to offer. Landlords, employers and insurance companies may also check your credit score to find out how responsible you are with your finances. There are several factors that may affect your credit score. Read on to know more about them.

Repayment History

Your payment history contributes a major part to your credit score. Based on how regular you are with paying your bills will affect your credit score the most. Your payment history will have complete details on your various accounts, including credit cards, retail accounts, installment loans and if there is any adverse public records for various events such as bankruptcies, liens, foreclosures and so on. So, regardless of how many accounts you have, keep your payment history right.   

The Amount Of Money You Owe And The Credit You Use

Another major factor that will affect your credit score is how much you owe on all your accounts, if your accounts have any balances, and the available credit that is being used. The more you owe compared to the credit limit offered to you, the lower your credit score will be. If you have already maxed out the lined of credit you will be considered as a risk. Therefore, always spend within the limit offered to you.  

Length Of Your Credit History

Having a longer credit history will help improve your credit score. This can be a big disadvantage for younger people. So, while all other factors may be the same, a younger person will generally have a low credit score compared to that of an older person. Regardless of this, it is possible for a person to have a high credit score despite short credit history by exhibiting responsible credit management.

New Lines Of Credit

Applying for new credit can have negative impact on your credit score. Every time you apply for a new credit card or loan, the lender will check your credit history and this can make your credit score to drop by a few points. Besides, the credit rating agencies will consider the number of recently opened accounts, the number of recent credit inquiries and how long it has been since you have opened your new accounts or the credit inquiries that have been made. It is recommended that you stay focused while shopping for loans or credit cards to avoid credit score deductions.

Other Factors

Having just one type of credit is another factor that will affect your credit score. Therefore, it is important that you have a variety of credit types so that it can help you to improve your credit score. If you have longer credit history then you should have a mix of credit types so that it exhibits you as an experienced borrower.


Apart from the above mentioned factors there are certain actions that can also have a greater negative impact on your credit score than others. They include-

Missed Payments

No matter how regular you were with your payments in the past, skipping even a single payment can make your credit report bad. Late or missed payments will remain on your credit reports for up to seven years.


When a debt is charged off by a creditor, it means they are sure that they won’t be able to recover the money you owe and wrote your account off as a loss. For any future use the charged off account will get closed and the creditor may continue to report about the due amount and balance you owed. Most lenders also sell such accounts to a collection agency.


Once a creditor feels that they will no longer be able to recover a debt, they may hand over the case to the collection agency to try to get you to pay off the debt. Collections are negative information that stays on credit reports for several years.

Settled Accounts

When a creditor agrees to accept less amount than what you actually owe, your debt is considered settled. However, since the repayment amount will always be less than as it was agreed originally, settled account is considered to be negative information on credit report.