Articles >> What Affects Your Credit Score…and What Does Not

 

There are a few major items on your credit report that primarily affect your credit score, but first let’s discuss the things that don’t affect your credit score.

1.  Your bank account has no effect on your credit score (unless you bounce checks and those turn into collections).

2.  The payment of your household bills does not affect your credit score (except when you don’t pay the bills and they become collections).

3.   The payment of your insurance does not affect your credit score.

4.  The payment of your rent doesn’t affect your credit score (unless you violate your lease and that turns into a collection or judgment).

5.  Payment of medical bills has no effect on your credit score (unless you don’t pay them and they turn into collections).

What affects your credit score is any item reporting on your credit report. All the loans and credit cards on your report affect your score. Some banks (small town banks) don’t report to the credit bureaus and loans that don’t report to them don’t help your credit score. Any late payments in excess of thirty days late on your credit report very negatively affect your credit score. If you get 60 or 90 days late, your credit score will take a very long time to recover.

Any balances that show up on your credit report are also what affect your credit score. If you carry high balances on your credit cards in relation to the credit limit, this will negatively affect your score. You should never carry a balance over 30% of the credit limit. If you have balances over 30%, you should pay them down.

Especially if you don’t have a lot of credit, new credit will greatly impact your score. If your overall credit history is not very long, taking on a new car loan will lower your score. After you have made payments on the loan for 6 months, if your payments were on time, they will start improving your credit score, but to begin with, your score will drop.