A credit score is a three-digit number ranging from 300 to 850, based on your credit history. Lenders use it to assess the risk of lending you money. A higher score means better interest rates, higher credit limits, and more financial flexibility. A lower score can lead to denied applications or high-interest rates that make borrowing expensive.
What Impacts Your Credit Score?
Your credit score is influenced by five key factors:
1.) Payment History (35%) – Making on-time payments builds trust. Even one missed payment can significantly drop your score.
2.) Credit Utilization (30%) – This is the percentage of your available credit in use. Experts recommend keeping it under 30%, but under 10% is ideal.
3.) Credit Age (15%) – The longer you’ve had credit accounts, the better. Closing old accounts can lower your score.
4.) Credit Mix (10%) – Having a mix of credit types (credit cards, loans, mortgages) shows responsible credit use.
5.) New Inquiries (10%) – Each hard inquiry (when applying for credit) can slightly lower your score. Multiple inquiries in a short time can hurt more.
How to Improve Your Credit Score
Negative Factors That Lower Your Score
Late payments
Maxing out credit cards
Collections & charge-offs
Bankruptcies & foreclosures
Too many credit applications in a short period
Restoring your credit isn’t an overnight process, but with the right steps you can rebuild and boost your score. The first and most important step is to pay your bills on time, because missed payments can really hurt your credit. Another big factor is lowering your credit usage by paying down balances to 30% but ideally under 10%. Regularly checking your credit report for errors is essential as well, as mistakes can unfairly lower your score.. disputing inaccuracies can help correct these issues. Also, keeping older credit accounts open helps maintain a longer credit history which is great for your score. Lastly, be mindful of hard inquiries, applying for too much credit in a short period can temporarily lower your score. If you have negative marks on your report, using strategic credit-building tools like secured credit cards or credit-builder loans can help you re-establish trust with lenders and improve your financial standing over time.
How Long Do Negative Items Stay on Your Report?
*Late Payments: 7 years
*Hard Inquiries: 2 years
*Collections: 7 years (from the original delinquency date) *Bankruptcies: 7-10 years, depending on type
*Foreclosures: 7 years
* Charged-off Accounts: 7 years
What Legally Can’t Be in Your Credit Report?
Your credit report CANNOT include:
-Your income, job history, or net worth
-Race, gender, marital status, or religion
-Criminal records (except financial-related judgments)
-Medical debts under $500 (per new credit reporting rules)
Your rights under the Fair Credit Reporting Act (FCRA) protect you from inaccurate, outdated, or unfair credit reporting.
Take Control of Your Credit
Want a step-by-step plan to improve your credit? Download our Credit Repair eBook for expert insights and actionable strategies!
