4 Factors That Might Affect Your Credit Score

Lenders make decisions about you based on the number of your credit score. Improving and protecting your credit score is crucial for g...

Lenders make decisions about you based on the number of your credit score. Improving and protecting your credit score is crucial for getting approval for credit cards and loans. With that being said, there are a variety of factors that may be affecting your credit score. By pinpointing what exactly is affecting your credit score, you’ll be able to make changes accordingly and with time, see improvements.

Inaccurate Report

Not often enough do individuals check their credit reports as much as they check their credit score. The downfall to that is that you might not see what is directly affecting your score. Checking for accuracy is crucial as one mistake can damage your credit. Everyone is entitled to a free copy from each of the credit reporting agencies. If you find that there is a mistake, dispute it immediately.

Payment History

Your bill payment history determines 35 percent of your FICO score. Payment history is built each month and it’s an accumulation of how you’ve handled your debt. Ideally, healthy payment history is when you pay your debts on time without missing payments or making late payments. Even just one missed or late payment can negatively impact your credit. That’s why it’s important to write a goodwill letter in the event that you accidentally make a late payment. Lenders want to ensure that you’ll pay back your loans in a timely fashion, which is why your score plays a huge role in their decision.

Credit Inquiries

The number of credit inquiries can you have can negatively affect your credit score. Each time a lender requests a credit check, an inquiry will be placed on your credit report. A few inquiries won’t affect your score that much; however, hard inquiries in a short period of time may raise a concern to the lender and negatively affect your credit score. Hard inquiries typically remain on your credit file for at least two years. As you submit applications that require a credit check, keep in mind that you should keep them at a minimum to preserve your credit score. Although soft inquiry’s such as checking your own credit will not negatively affect your score.

Age of Credit History

The older your credit age is, the better. An older credit age displays your experience with new accounts. A longer credit history gives lets lenders know that you have more experience using credit. There isn’t much you can do to improve your age of credit, but it is important to note that the age and length of your credit history account for 15 percent of your credit score.

What Doesn’t Affect Your Score

It’s also important to know what doesn’t affect your score. You don’t want to focus on factors that won’t make a difference in improving your overall credit score:

• Age, ethnicity, religion
• Marital Status
• Bank balances
• Salary
• Child/family support 
• The location you reside in

Tips to Improve Your Credit 

If you want to improve your overall credit score, you’ll need to understand what’s negatively impacting and then make changes. Some tips include:

• Paying off your highest debt first
• Avoid making hard inquiries 
• Start making payments on time 
• Improve the length of your credit history by keeping old credit cards open 

Taking the time to understand what affects your credit score is taking a positive step to taking control of your finances leading you to repair your credit. A good credit score will allow you to get approved for a loan you need or an apartment you’ve been wanting. Not to mention a healthy score give you the best interest rates, resulting in lower fees. As all of these factors play a role in your credit score, understanding each part will help you make improvements. With positive changes and patience, your score will increase.

Katherine White writes articles for businesses that want to explore different marketing strategies. Currently, she is a contributor for 365 Business Tips and a digital marketing expert for e-commerce brands such as Breazy. Her educational background in Public Relations helps her tackle topics regarding strategy, branding and messaging.