A couple of weeks ago I did a credit report and much to my surprise my score went up. This isn’t a big achievement since the previous year my score took a big hit. I decided I wanted to do a review of my credit history for the last 3 years and determine what caused my credit score to change and what can I do to repair it. First lets look at what affects your credit score.
Things That Affect Credit Scores:
- Large Amounts Owed – If you have a large amount of outstanding credit this will affect your score because it increases the risk that you will default on it.
- New Credit – applying for or receiving new credit will lower your score because this may be a sign that something has changed and you are in desperate need of additional credit.
- Payment History – Do you pay your bills on time? Constantly paying late may be a sign that you are falling behind on your commitments and will eventually default on your credit. This will lower you score because you are a greater risk.
- Type of credit – To many of the same type of credit may have an impact on your credit score. Having too many credit cards (also known as revolving credit) is a problem even if you don’t carry a balance. There is added risk that you will utilize all of this credit at the same time and then default on all of it.