Advertiser Disclosure

Advertiser Disclosure: We may have financial relationships with companies listed on our site. We may receive compensation for placement of sponsored products or services and this may affect our decision about who to promote and where to promote them. We make every effort to be authentic and accurate with every article we write.

Credit Scores

12 Factors that Affect Your Credit Score


Next to your medical profile and motor vehicle record, your credit report may be the most important document you’ll ever need.

Contained within your credit report is a three-digit number that signals to lenders whether you’re a good credit risk, or someone who’s had difficulty paying bills, from time to time.

Your credit report contains a wealth of information that is broken down into five distinct sections:

    1. Personal identifying information such as place of employment, address, and any variations of the name are listed first. This includes misspellings and other names or initials used in the past when applying for credit.
    2. A summary of credit accounts lists the number of accounts held (both open and closed) as well as any current balances.
    3. Account history is included in the credit report and makes up a large part of the credit score as well. Account numbers, the status of each of the accounts, and how promptly they have been paid are documented here.
    4. The public records section of the report identifies any liens, judgments, or bankruptcies in your name, or associated with your name.
    5. Credit inquires (both hard and soft) are included in the credit report. These reflect the number of times prospective lenders, landlords or future employers access your credit report. Soft inquiries only reflect credit inquiries made for promotional purposes, or for background checks and will not hurt credit scores. Too many hard inquiries however, may make an applicant look bad in the eyes of future lenders and can negatively impact scores.


12 Things You Wish You Knew About Credit Reports Before Borrowing Money

    1. Credit utilization ratio is important to most lenders. This takes into consideration the amount of debt you owe on a particular account, and the credit limit assigned to you. Banks and credit card companies look for a ratio of no more than 30%, meaning your balance should not exceed 30 percent of your credit limit. Maxed out credit accounts look bad to prospective creditors and lower credit scores.


    1. Think long-term when attempting to clean up credit reports and raise credit scores. While paying off bills quickly will contribute to your overall credit picture, performance over time is what creditors need to see.


    1. The single most important factor used in credit score calculations is payment history. This makes up roughly 35% of a FICO credit score and includes the number of times an account is paid late.


    1. Nearly one-third of all credit reports across the nation contain errors or misinformation that could cause creditors to deny an individual credit.


    1. “Soft pulls”, also known as soft credit inquiries are not damaging to credit. Many people falsely believe that checking their own credit report can lead to lower credit scores.


    1. Consumer laws, including the Fair Credit Reporting Act, 2006 enables you to dispute any erroneous credit information, or misinformation reported to credit bureaus or creditors.


    1. Not all hard inquiries negatively affect credit scores. Credit bureaus often make allowances for individuals shopping for the same types of credit within the same 14-day period. Bureaus know that home and auto purchases often involve finding the best deal, and that includes financing. Shopping for multiple credit card accounts will lower credit scores, however.


    1. Don’t cancel old or unused credit accounts if you don’t need to. One important factor in credit scoring involves the use of open credit lines and the amount of available credit remaining. Closing these accounts completely may negatively impact the credit equation, and lower credit scores.


    1. Even if your rent payment history or utility bills are not currently reported to the three major credit bureaus, it’s still important to pay them on time. Most landlords and utility companies still reserve the right to report how well you pay them and can begin reporting information at any time.


    1. There should be no surprises when applying for credit. You are entitled to three free credit reports annually, one from each of the three major credit bureaus. Don’t wait until a major purchase is necessary before finding out your credit status.


    1. Joint credit reports do not exist. While joint accounts are reported on both your credit report, and the other party’s each of you has an individual credit report and credit score. If you obtain credit in your name only, the account is not listed on your spouse’s credit report.


  1. A divorce does not automatically remove your spouse from your joint credit accounts or individual credit reports. Once financial agreements between the two of you have been made, you must take specific steps to close accounts, refinance loans in your name only, and pay off creditors you both owe.

Before applying for credit of any kind, it’s critical to understand the factors that affect your credit report, and how credit scores are calculated. With this knowledge you’ll be better prepared to secure the best credit and loan opportunities, with the best interest rates and terms.

Photo of author

Jeff Dunphy

Jeff Dunphy has years of experience in the field of borrowing. He is the founder of a website that teaches consumers about credit cards, credit scores, loans, and credit repair.
Want to Say in the Loop?

Get the latest updates we offer about all things "Money" by signing up for the CashBlog newsletter.

As Seen on

The content on is for informational and educational purposes only. It is not financial advice and we are not certified financial advisors. strives to keep its information accurate and up to date, but it may differ from actual numbers. We may have financial relationships with companies listed on our site. We may receive compensation for the placement of sponsored products or services. We work hard to write authentic and accurate articles.