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Top Things That Affect Your Credit Score

The First Steps to Credit Restoration

Credit is one of the most critical factors to financial stability. More than half of Americans have either a poor history or none at all which significantly influences accessibility to housing, transportation, education, and employment opportunities. Depending on the credit bureau, scores will range between 280 and 990. The average rating, according to Forbes, is around 700.

Your credit score is a calculation of payment information, utilization rate, credit history, and creditor inquiries. If you are one of the millions of Americans googling ‘how do I fix my credit,’ then you should pay close attention to your activity. If you cannot monitor it yourself, credit repair companies will track changes and provide personal finance tips that improve your credit score significantly.

Here Are The Top Things That Affect Your Credit Score That You Need To Know:

1. Payment History (35% of Score)

A critical element that affects a credit score is a consumer’s payment history. Do you pay on time? Do you ignore financial obligations? A creditor will determine trustworthiness based on payment history before extending any new lines of credit.

  • Unpaid Bills

Bills that go unpaid are one of the most problematic issues that affect credit ratings. From broken rental contracts to unexpected medical bills, reports to your credit bureau will quickly lower your score. Most companies provide a window of opportunity to make arrangements, so this is the ideal time to take advantage of credit repair services that put into place a structured repayment plan that will reflect positively with credit bureaus.

  • Property Liens

An outstanding property or tax lien will affect your credit score significantly.

Unpaid liens will stay on your credit report for ten years from the date of filing. When paid, it will still affect your history for seven years as it is considered a negative reflection of your creditworthiness.

  • Credit Card Account Closures With Unpaid Balances

A closed account with an unpaid balance will reflect negatively on your payment history. Delinquent accounts remain on your history for seven years while paid accounts will stay on record for ten years. Credit repair companies are ideal sources to work with if you have an abundance of closed credit card accounts as they will teach you how to restore your credit will avoiding future losses.

  • Delinquent Credit Card Payments

Lendors will notify credit bureaus when consumers are late or miss payments. While some creditors offer a window to remit payment, others inform immediately after a missed due date which will directly affect your credit score. With multiple missed payments, your credit provider will close your account which will also affect your score.

  • Bank Overdrafts

While regular banking transactions do not affect your credit score, unresolved bank overdrafts do. When you have overdraft protection, your bank extends you credit protection and charges a fee when utilized. Most customers pay overdrafts quickly and continue using banking services without issue. For some consumers, negative balances will eventually affect credit ratings after unresolved accounts go to collections.


2. Credit Card Utilization Rate (30% Debt and 10% Credit Usage Of Score)

Whether you are requesting a credit increase or applying for a new line of credit, your provider will check your credit card utilization rate. You should ideally remain below 30% of your credit limit. If your utilization rate is high, it indicates risk. As it gets higher, it hurts your credit score because of the increase of debt and decrease of available credit.

Example: Card One:   $5000 limit

Card Two:   $4000 limit

Card Three: $2500 limit 

Total Credit: $11,500

Total Debt:   $3,500

Credit Utilization: ($3500/$11500) =  30.4%


3. Credit History (15% of score)

Age of credit will positively or negatively affect your credit score. A person who has built and maintained a positive credit history for many years will have a better score than someone who opened an account recently. Credit scores also consider the number of reports in your past to gauge your financial credibility.

  • Minimum Credit Card Payments

Paying the minimum monthly credit card payments will negatively impact your score in two primary ways. First, it affects your credit history which hinders your ability to get credit limit increases. Second, the amount you owe will change your credit utilization rate as mounting debt will increase your monthly payments while decreasing credit availability.


4. Credit Inquiries (10% of score)

Multiple credit inquiries will also affect your credit score. If you intend to apply for various credit cards, space them out over time so that it does not cost you additional points. Submitting applications to different lenders to purchase a car, take out a mortgage, or secure a student loan will not affect you in the same way since credit bureaus consider different lenders as one inquiry. Credit bureaus consider consumer inquiries as soft hits, so it will not affect your score regardless of how often you check.

  • Credit Report Discrepancies

The Fair Credit Reporting Act (FCRA) requires credit agencies and lenders to correct inaccuracies. Once you notice something amiss, you need to quickly take action to avoid the potential harm to your credit score.

  • Step 1: Contact Agency In Writing. You must include your full name and address, the inaccuracy, copies of supporting evidence, and a statement to request its removal. The FTC provides a sample letter to help you through the process. The primary credit reporting agencies to notify are:
  • TransUnion 1-800-916-8800
  • Equifax    1-800-685-1111
  • Experian    1-888-397-3742
  • Step 2: Notify The Company: You will also need to notify in writing the company or agency who submitted the information to the credit bureau. If you have multiple discrepancies, you will benefit from credit repair services that sort out differences from actual debt.


Googling ‘how do I fix my credit score’ will provide you with millions of ways to manage your credit, but only a few of the sites will be trustworthy. Our credit repair information is up-to-date and linked to reliable sources. Moreover, we cover a variety of topics including finance, loans, credit, money-saving tips, and insurance that will help you increase your financial knowledge. We also take the time to find top-notch credit repair companies like Lexington Law Firm so that you have access to the tools and resources necessary to rehabilitate your credit score responsibly.

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