How Debt Affects Your Credit Score

Maintaining a good credit score is key to having a healthy financial life. Unfortunately, many people do not know how to properly take care of their credit scores. This blog post includes some tips on maintaining a good credit score. Following these…

If you haven’t educated yourself about credit scores, yours is most likely not as good as it could be. Having a good credit score can save you hundreds of thousands of dollars throughout your life. Here are the factors that contribute to a credit score.

Credit Score

Length of Credit

Don’t close any of your accounts because the number of years you have credit effects your score. If you don’t have an established credit history yet, open a first credit card, or talk with someone at Rescue One Financial.

On-Time Payments

This factor weighs heavily on your score, so if you haven’t been vigilant about due dates, this should be the first thing you change.

Available Credit

To find what percentage of credit you are using, divide the total of what you owe by the total credit limits of your loans. Ideally, you’ll want your credit utilization rate to be under thirty percent to be in good standing.

Number of Credit Inquiries

When you apply for a loan or a credit card, the lender will do a hard pull on your credit. Each of these hard pulls will show up on your credit report. The hard pulls stay on your report for two years but don’t have a significant effect on your score. If you are trying to improve your score, though, don’t apply for a new account right away.

Number of Accounts

Eventually, you’ll want to have over twenty accounts. However, this factor is less important than the length of your credit history, so resist the urge to open several new accounts at once. It’s better to pace yourself.

Derogatory Marks

Creditors have to assess risk, and if you have derogatory marks on your credit report, it’s a big red flag. Derogatory marks include bankruptcies and account gone to collections.

Check your score and work on these five things to improve it.

Credit Score




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DollarBreeders is a personal finance blog dedicated to people who want to take control of their finances and secure their future. Here you will find personal stories to inspire you to make better and more informed financial decisions. We aim to help people understand personal finances better and meet the challenge of living comfortably within the budget.