What Affects Your Credit Score the Most?

Many have been worrying about their credit score since they were teenagers. It is an essential aspect of growing up and is needed to buy much of what you need for adult life—everything from a house to a mattress to a car. In order to purchase any of these, you must have a good credit score. Keep reading to find out what a good credit score is and what affects your score the most!

What is a good credit score?

Credit scores usually range from 300 to 850, but they can go lower if one has never had credit. A decent credit score typically ranges from 580-669. It will be challenging to receive a loan or purchase a car, but not impossible. A good credit score is 670-739. With a good credit score, you can apply for just about anything and most likely get approved. It shows you are responsible and can handle your credit well. Finally, an excellent credit score can be anywhere from 740 to 850. Credit scores this high allow you to have lower interest rates and an easy time applying for other types of credit.

What affects your credit score the most?

Now it's time to look at the aspects that can affect your credit score the most, whether good or bad. Here are the top five you need to keep in mind:

#1: Not paying your bills on time

If you are consistently late on paying your bills every month, your credit score will suffer. Make sure anything you owe is paid back each month, and you do not miss a payment. If you miss payments consistently, you could get sent to collection, and this will cause your credit score to become lower.

#2: Opening a new credit card

Applying for and opening up a new credit card can help to increase your credit score, but be sure to use it wisely. However, if you open up too many credit cards in a short amount of time, your credit score will go down. In addition, if you apply for too many cards at once, creditors see this as financial instability, and your applications more than likely won't be approved.

#3: Length of credit history

The earlier you start your credit journey, the better. The length of your credit history accounts for about 15% of your total credit score. It can be hard to start as young as a teenager, but try your best to get some type of credit card as young as you can—the age of your oldest account factors in quite a bit.

#4: Amount of debt

The amount of debt you have has a significant impact on your overall credit score. Having some debt is completely normal, such as a mortgage or student loans. But, having too much debt is bad for your income and credit. You want to be able to pay off your debt as effectively as possible. Do not overspend and use your credit responsibly.

#5:Types of accounts

The types of accounts you have do affect your credit score as well. These accounts include auto loans, a mortgage, personal loans, and any type of student loan. Having different types of accounts can show how well you can manage multiple accounts but do not have any that aren't necessary. Keep a good "credit mix," and your score will thank you.

These are five of the most important factors that will affect your credit score. So keep them in mind when you are trying to improve your credit score!

Use this article when you need a guide on managing your credit score. Credit scores are an important part of adulthood, so be sure you take them seriously. Messing up your credit score can have many negative consequences on your finances.