5 Most Influential Factors in Your Credit Score

March 5, 2012 | Posted By: Andrew Bennett

Every adult has a credit score which is created with the past financial decisions and records of their live so far. A credit score is used to determine whether you qualify for a mortgage on a new home, a car lease agreement, a credit card and even potentially an employment offer. Many people are shocked when they discover that their credit scores and significantly lower than they would have expected. Unfortunately, even some minor mistakes can result in a less than perfect score. Here are a list of the most influential factors that play a role in determining your own credit score.

Timely Payments

If you have a habit of paying your bills late, it may come back to haunt you in the form of your credit rating. Although most loans have a few days of leniency when accepting payments that are a few days late, even one very late payment could reduce your credit score by a significant amount. Keep that in mind and do your best to pay bills on time, setting up automatic bill pay or scheduling the payments on your calendar if necessary.

Amount of Debt

The amount of debt you have is often less important than the percentage of debt you have. For example, if you have a credit card with a ten thousand dollar limit, you should try to never have more than three thousands of dollars owed on the balance. Thirty percent is a reasonable amount to owe. However, if you have a credit limit of one thousand dollars, you would want to owe no more than thirty percent of that, or three hundred dollars.

Length of Credit History

If you have just recently opened up lines of credit for the first time you might expect that you credit history is very strong and you have a high rating. However, it takes time to determine a quantifiable amount of credit. Over time it is more likely to notice patterns that signify a great credit rating. Don't expect to have an excellent credit score until you have been able to prove yourself over up to ten years.

Types of Credit

Not all lines of credit are created equally. Having a mortgage on a home is a great type of credit that shows you are a trustworthy investor for a large purchase like a house. Having credit cards that are paid off regularly is also a great type of credit, while department store cards are ranked slightly lower. Ideally, you will have a mix of different type of credit lines to show that you are a stable person.

Frequent Applications for Credit

The constant need for new lines of credit is not regarded as a good thing when it comes to determining your credit score. Rather than applying for several new credit cards often, it is best to go directly to your bank or even apply online for one single credit card rather than several.

These five factors are the most influential aspects of determining a person's credit score. Pay attention to them and you’ll have a stellar credit score in no time!


Andrew Bennett is a debt specialist who suggests his clients obtain a bad credit credit card in order to re-establish their credit history.
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