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Factors That Affect Your Credit Score

As a consumer reporting agency, we procure a wide range of personal information from name/address history and criminal records data to credit and financial information.

Although criminal and Identity records have a significant amount of influence when it comes to getting a job, purchasing a firearm, or even gaining custody rights, one’s credit report can also have a significant influence on the ease with which they navigate through life. Poor credit can mean loan denial, high-interest rates, and overall difficulty influencing one’s financial situation for the better. It’s no wonder why we frequently get questions regarding credit. 

Here are some of the common questions we receive:

  • What will or won’t show up on my credit report?
  • What are negative credit items?
  • What are the factors that influence my credit score?
  • How can I improve my credit?

Providing Some Clarity

While your credit score is good to know, credit reports provided by CRAs like us are also focused on factors that ultimately influence the score. These factors often include historical lines of credit, payment history, and negative items.

Negative Items

What exactly is meant by negative items? Well, here are four of the most impactful:

  • Late Payments
  • Collections
  • Charge-Offs
  • Bankruptcy

Negative items such as those listed above account for around 35 percent of one’s credit score. If there are a number of late payments or collections sitting on your credit report, your credit score will certainly be negatively impacted.

Other Credit Influencing Factors

Aside from negative items, there are a few weighty factors that work to influence one’s credit health. Experian outlines the following:

  1. Credit utilization. Credit utilization is essentially a measure of how much credit you are using compared to what you have available. Healthy credit utilization is anything 30 percent and below. This means if you only have one credit card with a $1000 limit, you should aim to keep the statement balance at $300 or below. Credit utilization accounts for around 30 percent of one’s credit score.
  2. Credit History Length. The length of time one holds credit accounts certainly matters. This includes the age of the oldest account, the age of the newest account, and the average of all accounts. Credit history length accounts for around 15 percent of one’s credit score.
  3. Credit Diversity. Having different account types works to benefit one’s credit score. Having a credit card alone is not as beneficial as having a credit card, car loan, and a mortgage, for example. Credit diversity accounts for about 10 percent of one’s credit score.
  4. New Credit. The number of new accounts, as well as hard inquiries initiated by lenders, can negatively impact credit (albeit temporarily in most cases) by up to 10 percent.

Your Credit Report

As mentioned earlier, a Consumer Credential credit report will not only outline the credit score but also the factors that influence it. In many ways, these insights are much more actionable and go much further in painting a clear credit picture. 

Once individuals become aware of potential blemishes in their credit history, it becomes much easier for them to make necessary adjustments, plan for the future, and even seek credit repair from a trusted credit restoration company.

At Consumer Credentials, it’s our job to provide individuals with the information that exists about them, whether in the credit bureaus or at the courthouses. We seek to educate and bring clarity to each individual situation, delivering valuable insights that can be leveraged for a better future.

For more information, visit us online.

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