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Credit Score Factors You Didn’t Know About

When it comes to managing your finances, your credit score plays a crucial role. It determines your eligibility for loans, credit cards, and even rental agreements. While most people are aware of the basic factors that affect their credit score, such as payment history and credit utilization, there are several lesser-known factors that can also impact your score. In this article, we will explore some of these credit score factors that you may not be aware of, and how they can affect your overall creditworthiness.

The Age of Your Credit History

One factor that many people overlook when it comes to their credit score is the age of their credit history. The length of time you have had credit accounts can have a significant impact on your score. Lenders prefer borrowers with a longer credit history as it provides them with more information about your financial habits and ability to manage credit responsibly.

If you have a relatively short credit history, it may be beneficial to keep your oldest credit accounts open, even if you no longer use them regularly. Closing old accounts can shorten your credit history and potentially lower your credit score. However, it is important to note that keeping old accounts open may also require you to manage them responsibly, such as making occasional small purchases and paying off the balance in full each month.

Credit Mix

Another factor that can impact your credit score is the mix of credit types you have. Lenders like to see a diverse range of credit accounts, such as credit cards, installment loans, and mortgages. Having a mix of different types of credit can demonstrate your ability to handle various financial responsibilities.

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While it is not necessary to have every type of credit account, having a healthy mix can positively impact your credit score. For example, if you only have credit card accounts, adding an installment loan, such as a car loan or personal loan, can help diversify your credit mix and potentially improve your score.

Hard Inquiries

When you apply for new credit, such as a credit card or loan, the lender will typically perform a hard inquiry on your credit report. A hard inquiry can temporarily lower your credit score by a few points. This is because it indicates to lenders that you are actively seeking new credit, which can be seen as a potential risk.

While a single hard inquiry may not have a significant impact on your credit score, multiple inquiries within a short period can raise red flags to lenders. It is important to be mindful of how often you apply for new credit, especially if you are planning to make a major purchase, such as a car or home, in the near future.

Public Records and Collections

Public records, such as bankruptcies, tax liens, and civil judgments, can have a severe negative impact on your credit score. These records indicate that you have had serious financial difficulties in the past and can make lenders hesitant to extend credit to you.

Similarly, collections accounts, which occur when you fail to repay a debt and it is sent to a collection agency, can also significantly lower your credit score. It is important to address any outstanding collections accounts as soon as possible to minimize the negative impact on your credit.

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Credit Utilization

Credit utilization refers to the percentage of your available credit that you are currently using. It is calculated by dividing your total credit card balances by your total credit limits. Lenders consider a lower credit utilization ratio to be a positive indicator of creditworthiness.

For example, if you have a total credit limit of $10,000 and your current credit card balances add up to $2,000, your credit utilization ratio would be 20%. It is generally recommended to keep your credit utilization below 30% to maintain a good credit score.

One way to manage your credit utilization is by regularly monitoring your credit card balances and making timely payments to keep them low. Additionally, you can request a credit limit increase from your credit card issuer, which can help lower your credit utilization ratio.


While payment history and credit utilization are well-known factors that affect your credit score, there are several other lesser-known factors that can also impact your creditworthiness. The age of your credit history, credit mix, hard inquiries, public records and collections, and credit utilization all play a role in determining your credit score.

It is important to be aware of these factors and take steps to manage them effectively. By maintaining a long credit history, diversifying your credit mix, minimizing hard inquiries, addressing public records and collections, and keeping your credit utilization low, you can improve your credit score and increase your chances of obtaining favorable credit terms in the future.

Remember, your credit score is a reflection of your financial responsibility and can have a significant impact on your financial well-being. By understanding the various factors that influence your credit score, you can make informed decisions and take actions to improve your creditworthiness over time.

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