What Factors Impact My Credit Score?

Regardless of the financial milestones you’re reaching, when it comes to financial progress and credit, it’s important to understand the factors that may impact your credit score. Consider the following:

Have you generally made payments on time?

One of the key behaviours that lenders and creditors like to see is on-time payment of bills. Since this is one of the strongest predictors of a consumer’s likelihood to meet their financial obligations, it is an important factor in credit scoring models.

Do you have different types of credit accounts?

Credit scoring models look at the mix of different types of credit you have, such as credit cards, installment loans, mortgages, and store accounts. Creditors like to see that you’re able to handle multiple accounts of different types and your credit score reflects this.

How many new credit accounts have you opened?

Be mindful of opening too many accounts at once. Scoring models look at how many new accounts you have as well as how many new accounts you've applied for recently. This may indicate you are planning on taking on lots of new debt which could indicate a greater credit risk.

How old are your credit accounts?

In general, creditors and lenders like to see that you’ve been able to properly handle credit accounts over a period of time.

Are your balances high relative to your total available credit limit?

Creditors and lenders prefer to see a lower ratio of how much debt you’re carrying compared with how much available credit you have on a particular account.

Do you have any judgments, liens, foreclosures, bankruptcies, or delinquencies that have been reported to the credit bureaus?

Having this type of information on your credit history may impact your credit score. If you have gone through financial hardship, and had to file for bankruptcy or completed a foreclosure, your credit score will reflect this negative information for several years.

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