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Factors that Affect your Credit Score

What is a credit score?

Low Interest Rate over keyboard

Low-Interest Rate

Credit scores are based on the information in your credit bureau record. The majority of Credit Scores are between 350 and 850. With a high score, you have a good chance of getting the credit and loan(s) you want. High credit scores are likely to get the very best credit and loan offers available from lenders.

The distinction between offers will come from the additional information you provide as part of your application(s), such as income and monthly payments. These factors will determine whether you can get the extra special low-interest rate, high loan amount, and/or other great features.

Want to learn more about what a background check consists of? Check out our post all about it!

Positive Factors that raise your credit score

Over time credit is built

Build credit over time

  1. Length of Credit History: Having credit accounts for a long time is a positive factor. Your history gives lenders information to evaluate how you typically use credit and repay your debts. Credit reports with approximately 30 years of history are considered optimal. Comparatively, up to 7 years of credit history is considered short, and less than 3 years of history is considered too little.

  1. Credit Accounts: Having a high amount of credit is a positive factor because it indicates to lenders that other lenders have trusted you by lending you money in the past. Meanwhile, having a low amount of credit is a negative factor because it indicates that either you are just starting to use credit or you have missed payments in the past.

Many Credit Cards

High Credit May Lead to More Accounts

  1. TIP: If you are just starting to use credit, lenders do not have the information to evaluate how you typically use credit and repay your debts.

Factors that lower your credit score

  1. Payment History: Missing payments is a negative factor. If you have not missed any payments recently, lenders may think you are responsible and do not miss payments. Also, missing payments on only a few accounts is not as harmful as missing payments on most of your accounts. This is because lenders realize that many people miss a payment (or pay late) once in a while. Also, missing a single payment is not as harmful as missing several consecutive payments. Many lenders consider missing 3 or more consecutive payments as an indication that you may never repay them.

Lots of Accounts May Lead to Lots of Debt

Woman managing the debt

  1. TIP: It is not as harmful to miss payments on accounts with low balances as it is on accounts with high balances. This is because lenders stand to lose less money on low balances if they remain unpaid.

  1. Credit Usage: High balances are usually a negative factor because lenders worry that you may not be able to repay them. This is particularly true with credit card debts.  Meanwhile, low balances are a positive factor because lenders do not stand to lose too much if you become unable to repay them.

To Know Before Applying

  1. TIP: Never using your credit cards may be considered a negative factor. It does not provide lenders with information about how you typically use credit and repay your debts. It also means that you have a lot of available credit, which you may decide to use if you experience financial trouble.

  1.  Credit Applications: When applying for credit (mortgage, auto loan, credit card, department store card…), your credit history is checked by a lender. This is an “inquiry” on your credit. Although inquiries are a natural result of applying for credit, lenders dislike seeing many within a short period of time. This is because it is hard for them to determine whether you are applying with different lenders in search of the best offer or if you are trying to obtain credit because of financial trouble. Remember, making many applications in a short period of time could hurt your credit score.

To learn more about credit events check out our post here explaining everything you need to know! For any questions or concerns, please call us at 415-353-0744 or email us at

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