Jul
13

Take Control of Your Finances by Learning What Affects Your Credit Score

July 13, 2014

credit cardsKnowing the many factors that affect your credit score can be a huge help when you’re trying to improve your creditworthiness and plan for the future. The more you learn about how your credit score is calculated, the easier it will be to improve your score, which can help increase your chances of getting an auto loan or a mortgage for your new home in Chicago. Even if you aren’t planning on borrowing money any time soon, it is still important to have a firm grip on your personal finances.

According to the recent article “

Ten Things That Affect Your Credit Score” on the Equifax Finance Blog, there are a variety of factors that credit reporting agencies use to determine your individual three-digit score. While each company uses its own scoring module, these factors are usually always considered:

  • Credit Diversity: Having a history of being able to manage a variety of types of credit will help your score, whereas only having one type of credit debt, such as credit cards, can negatively impact your score.
  • Payment History: Nearly 35 percent of your credit score is determined by your payment history. Late payments, past-due payments that are still outstanding and the amount of missed payments can all have a very large impact on your score.

As you become more familiar with how your credit score is calculated, you can begin to determine what you’re doing to negatively impact your score. If you want to keep your credit score from dropping, it is important to avoid these behaviors:

  • Collections: Having one of your credit accounts sent to collections can impact your score in a big way, so be sure to work with your creditor if you’re having difficulty making payments on an account.
  • Debt to Credit Ratio: Utilizing too much of your available credit can cause your credit score to drop. A general rule of thumb is to try and keep your balance below 30 percent on all of your accounts.

To learn more of the factors that affect your credit score, be sure to read the full blog post. Also, visit the Equifax Finance Blog to learn more about personal finance, real estate, retirement and more.

 

 

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Courtney Rogers

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