What impacts your credit score?

Published on Jul 01, 2021

What impacts your credit score?

What really determines your credit score?

If you’re like most people, you know a little about credit scores, but do you know enough? 

If you want to improve your credit score and make the most of your financial opportunities, a little knowledge goes a long way. That’s why we want to clear up some of the confusion. Understanding what goes into your credit score (otherwise known as your FICO® score) is the first step to building a healthy financial profile.

Public Records are judgments or actions taken against you (collections, foreclosures, liens, bankruptcies, etc.). These will negatively impact your credit score, so it is important to address them as soon as possible. If you can’t avoid a public record, or already have one in your history, they will automatically drop off after a set period (usually between 5-10 years). In the meantime, improving other areas of your credit history can help offset some of the impact.

If you have a high number of inquiries and a short credit history, you could see more of an impact, so it’s important to pay attention to your personal history when considering applying for new credit. Lenders understand the value of rate shopping and don’t penalize you for doing due diligence. The credit bureaus look out for this kind of activity and will generally lump multiple inquiries over a short period of time into one hard inquiry.  Check with the credit bureau for specific time frames before rate shopping. 

Improving your credit score

There is no quick fix for a low credit score. Be cautious of credit clinics that claim otherwise. The best way to improve your credit score is to make your payments on time, maintain as low a utilization rate as possible, and be smart about applying for new credit.  You should also check your credit score about six months prior to making a major purchase requiring a loan. This will give you enough time to correct as best possible any errors or other factors that may be dragging down your score. It takes a little patience, but doing this will send you on your way to a higher credit before you know it.