what affects your credit score

What Affects Your Credit Score?

Have you ever wondered what affects your credit score? While credit scores may appear mysterious in the ways they work, thankfully, you don’t need a degree in finance to figure that out.

Factors like your payment history, the debts owed, the credit mix, and credit history length can determine how financially responsible you are, and so how high your credit score might be.

Let’s have a deeper look into what are credit scores and what exactly affects them. We will also cover how to use online title loans to avoid things like late payments, which can really impact your score.

What Is A Credit Score?

Your credit score depicts your creditworthiness and it’s a number between 300 and 850. The higher the score – the better.

Mortgage bankers, auto dealers, credit card companies, and even insurance companies and landlords can have a look at your credit score to determine if there is a high risk of loaning money to you.

What Affects Your Credit Score? Top 5 Factors

Payment History (35%)

This factor consists out of various components. For example, ‘have you paid your bills on time?’, ‘have any of the accounts been sent to collections?’, ‘how late were you to pay?’, etc.

Debts Owed (30%)

Your score will also depend on the ‘credit utilization ratio’. Even if you have managed to make the payments on time, it doesn’t mean that you’ll have the resources to continue doing that in the future.

For example, the lenders want to find out how much of your total available credit you have used.

In a nutshell, owing a bit of money is usually better than nothing. But owing a lot of money can be seen as negative.

Credit Mix (10%)

The software likes to see that you have different types of credit that are all, of course, managed responsibly. A mix out of mortgages, installment loans, credit cards, and so on, affects your score in a good way.

But if you don’t have accounts in all these categories, don’t open a new one just for the sake of it.

Credit History Length (15%)

The longer you have been responsibly using credit – the better. For example, you can leave an old credit card account open, even if you are not using it. As the account ages, your score will boost.

what affects your credit score new credit cards

New Credit (10%)

What affects your credit score? The number of credit cards that you have applied for recently. If the number is high in comparison to the total, then your score will drop because you’ll seem like a greater risk.

What Affects Your Credit Score In A Negative Way?

Missing Payments

Even one late or missed payment can have a big negative impact on your overall score.

Defaulting On Accounts

Actions such as bankruptcy, foreclosure, charge-offs, and repossession are considered to be negative account information.

Applying For A Lot Of Credit In A Short Time

Every time a lender requests your credit report, a hard inquiry is recorded. Those stay in your credit file for 2 years. Too many inquiries can signalize that you are facing financial problems or are desperate for access to credit, which makes you a greater credit risk.

Using Too Much Available Credit

What affects your credit score? Well, being too dependent on credit is not a great thing. Ideally, your credit utilization has to be under 10% (under 30% is also okay).

title loan places near me

When Title Loan Places Near Me Can Help

We aren’t always lucky when it comes to the timing of our salaries being deposited. Sometimes money runs tight, especially if we are dealing with a financial emergency. This is when we may miss a payment or two, or at least run a bit late.

However, this can really impact your credit score and limit your future potential. One option we can consider when we find ourselves in a similar situation is getting help from title loan places near me.

Tennessee Title Loans, Inc. is a dedicated lender to providing its customers with the money that they need. Whether you have a good or bad credit history – you are welcome to request a loan and find out how much money you qualify for.

And the best part is that your title loan from Tennessee Title Loans, Inc. doesn’t go on your credit report, which maintains your score intact.

How To Get A Loan From Title Loan Places Near Me

To get a title loan today, you can follow this simple step-by-step guide to get your money in under an hour:

  • Fill out an online form on Tennessee Title Loans, Inc.
  • A loan representative will give you a call and talk you through the whole process – this is when you can ask all the questions that you might have. They will also schedule a meeting with you.
  • Collect your driver’s license or state-issued ID, your lien-free title to the vehicle, and, of course, the actual vehicle, and drive to your location of choice.
  • A loan representative will quickly check your documents and examine your vehicle.
  • If you qualify and get approved, you can get your money the same day.

Submit An Online Form Today

If you ever find yourself searching for “title loan places near me”, know that you can avoid impacting your credit score when you work with a lender like Tennessee Title Loans, Inc. So, if you’re facing an emergency, don't hesitate to get a fast and simple title loan today. 

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

Emma Frost

Emma Frost is a lifestyle and finance blogger with a talent for communication and a passion for financial literacy. She uses her writing talents to explore topics that help her readers gain financial stability and growth.