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What affects your credit score?

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We know what is in your credit score, but what things that you do actually affect your score, either positively or negatively? Let’s take a look at some of those things.

What makes your credit score go up?
Paying bills on time – This shows creditors that your trustworthy. It isn’t a quick method to increasing your score, but it is sure. And more importantly, if you don’t do it, your score will go down. Since your payment history is 35% of your score, this is huge.
Improving your credit utilization rate – This can be done by either paying off some debts or by increasing your credit limit. It is all about decreasing the amount you owe compared to your credit limits.
Remove negative or untrue items from your report – If there is something untrue, it could be negatively impacted your credit score. You need to make sure that your report is accurate.

What makes your credit score go down?
A hard credit inquiry – This is different than a soft credit inquiry, and it usually happens when you are applying for some type of mortgage or loan. However, this should be a short-term thing, and won’t affect your score for too long.
Missing a payment – This is the easiest way to wreck your credit score, if you miss a payment. When creditors see that, it shows them they might not be able to trust you, and lowers your score.
Open a lot of accounts at once – This could look suspicious to creditors, if you have just recently opened up a lot of new accounts. It’s better to stagger things a while, unless you know you won’t be needing a credit score as high as possible any time soon.
Closing your oldest credit account – If you have a relatively short credit history, this could have a negative impact on your score, because it lowers the length of your credit history. However, if you’ll have a long history even if you close your oldest account, you should be ok.
(EDIT: Kevin from Credit Bureau Insider has informed me that when you close an account, it does stay on your credit history for seven years, so closing your oldest account actually should not affect your score at all. Thanks to Kevin for the correction.)

Anything else that will affect your score?

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One Response to “What affects your credit score?”

  • I see the advice about holding onto your oldest account over and over. It seems like one of those tales told often enough that it becomes accepted as fact.

    When you close an account the history remains on your report for another 7 years.