Your credit has an impact on various aspects such as whether you would be able to easily secure a mortgage to purchase your dream home or a loan to purchase the car you always wanted. Hence, it is important to keep the common factors that affect credit score listed below in mind to avoid any negative impact on it.

Payment History
One of the most common factors that affect credit score is your payment history. This is the history of payments made by you to various debtors. It reflects whether you have made payments on-time or not. A single late payment would not affect your credit score as payment activity is usually reported to credit bureaus every 30 days. However, multiple late payments on a mortgage, loans or utility bills will affect your credit score. Outstanding parking tickets can also appear on your credit report and adversely affect your credit score.

Credit Age
The age of your credit accounts can affect up to 15% of your credit card score. The main factors that a lender would look at are how long you have held your oldest account and the average age of all your accounts. Hence, the older the account the more useful it will be in boosting your credit score. That’s why you are also advised to not close older credit cards even if you don’t use them and if they don’t cost you much in annual fees. An older account gives a better understanding of your payment history and helps to establish reliability.

Total Debt
One of the most obvious and common factors that affect credit score is the total amount of debt you owe. It could account for about 30% of your credit score. Also known as credit utilization ratio, this figure is calculated by comparing your credit limit or amount given to you by lenders and the credit you have actually used. Hence, it is advisable to keep this amount less than 30% as it helps lenders gauge whether you are a high- or low-risk borrower.

Ignoring Your Credit Report
Another one of the common factors that affect credit score and is most often ignored is your credit report. This report is free and easily available. It’s essential to check credit reports for any errors that could have an impact on your credit score. If you do spot an error ensure that you get it rectified or corrected as soon as possible. You can also get a detailed report annually from all the three credit reporting agencies: Equifax, TransUnion, and Experian. This in-depth report will help you analyze your credit score better.

These common factors that affect credit score should be kept in mind when you are trying to boost your score. Remember that even though your credit score is just a three-digit number, it plays an important role in your life.