Your credit score is primarily affected by a few major things on your credit report, but let’s first discuss the things that don’t affect your credit score.
1. Your bank account has no effect on your credit score (except when you bounce checks and they turn into collections).
2. The payment of your utility bills does not affect your credit score (unless you don’t pay the bills and they turn into collections).
3. The payment of your insurance has no effect on your credit score.
4. The payment of your rent doesn’t affect your credit score (except when 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 become 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 (especially smaller) do not report to the credit bureaus and loans that don’t report to them don’t help your credit score. Any late payments that are 30 days or more late on your credit report very negatively affect your credit score. If you get sixty or ninety days late, it will take a very long time for your credit score to recover.
The 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 avoid carrying a balance over thirty percent 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 cause your score to drop. After you have paid toward 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 suffer.
When it comes to getting a handle on your credit score, it can really help to know some things about what affects your credit score and what doesn’t.
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