Things That Impact Your Credit Score

How your credit score is calculated may seem like a mystery at times. It is not your marital status, where you live, or how much money you make that determines your credit score rather, your credit score it determined by the following five elements:

Payment History

Paying all of your bills on-time is probably the most important thing that you can do.  Failure to do so will result in adverse items showing up on your credit report that will impact your score.

Amounts Owed

This is often referred to as your utilization or how much of your available credit do you have available.  What is important is what is reported on your monthly statement.   For example, even if you pay your account off in full each month, if you have a $1,000 credit limit and your statement shows an outstanding balance of $500, you would have 50% utilization which is higher than optimal.  If possible try to keep your utilization below 30% and being below 10% is even better.  Maxing out your credit is seen as a negative by the credit bureaus.

Length of Credit History

For someone just starting out only time will help you improve in this category, however, if you have had credit for a while you may not want to close your oldest credit account. A long history of credit is considered a positive by the credit bureaus.

New Credit

Applying for new credit can have an impact on your score.  For this reason it is probably not the best idea to regularly apply for new credit.  Rather, if you are shopping for a new car loan, home loan, or better credit card, it is best to do it all over a 10-14 day window rather than spreading it out over a period of time.   

Types of Credit Used

Rent-to-own credit options may be looked at negatively while having a mortgage may be looked upon as positive.  Having different types of credit can be good but do not overextend your-self.

More information 

Get a Free Copy of Your Credit Report

If you haven’t obtained a recent copy of your credit report, that is the first step.  Visit for a free report from all three bureaus.

If you see errors on your report, dispute these with each bureau.  Instructions on how to do so are at each site.