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What Impacts Your Credit? – McKinney, TX

important Items to consider

Street signs reading Bad Credit and Good Credit

When it comes to repairing your credit, knowing what actually influences your score is absolutely essential. At Jubilee Credit Freedom, our team of experts is very familiar with all of the various factors that can raise or lower a person’s score, but this kind of information is unfamiliar to most individuals. We strive to help our clients understand every part of their credit repair process, so on the page below, we’ll touch on everything that might be hurting your score right now.

Payment History

Calculator dollar sign and stacks of coins

It can’t be understated: Your payment history is one of the most important factors when it comes to your credit health.

A history of consistently making on-time payments will give someone a good credit score while missing some can hurt it. The longer a bill goes unpaid, the greater impact it has, and the overall amount that is owed matters as well. However, once a person starts making on-time payments and reducing their debt, then the harm caused by any missed payments will go away over time.

Credit Usage

Smiling woman holding a credit card

The amount you owe on any credit cards, personal loans, mortgages, auto loans, or student loans can also impact your credit score. What matters more, however, is something called your credit utilization rate.

What is this? It’s the ratio between the total balance you owe versus your total credit limit on your revolving credit accounts (such as credit cards). The lower the utilization rate, the better someone’s credit score will be. On the flip side, a high utilization rate can be the result of someone maxing out their credit cards and/or leaving balances unpaid, which leads to a lower score.

Length of Credit History

Credit history on computer screen

Factors like the age of your oldest credit account, the age of your newest account, and the average age of all your accounts can also influence your credit score as well. Opening new accounts can lower the average age of your accounts and possibly hurt your score, while closed accounts can have the opposite effect (though they will stop being on your credit report after 10 years).

Credit Mix & Types

Closeup view of credit card chip

If you use different types of credit (learn more about them here), this can help your score as well, but this is a relatively minor factor compared to the ones listed above.

Recent Credit

Smiling woman

When you apply for a new line of credit, a creditor may take a look at your score before they decide to approve you, and this is known as an inquiry.

Soft inquiries, like those stemming from checking your own scores or from certain loan/credit card prequalifications, don’t affect your score.

Hard inquiries are when a creditor checks your score before giving you a loan, and these can actually hurt your score if you don’t end up getting approved. A single hard inquiry only has a minor effect, but if someone has many hard inquiries on their credit report, it can noticeably lower their score.

So, which of these factors are the cause of your credit troubles? And, what can be done to improve them so they stop harming your score? We can help you find out with a FREE personalized credit consultation. We’ll figure out exactly what is lowering your score and how it can be fixed, all at no charge to you! To get started, contact us today.