Executive Education

Exploring The Factors That Can Affect Your Credit Score

Whether you are looking to invest in a new home or a car there is chance that you are going to have to get approved for a loan by the bank.

Did you know that your credit score is one of the most important factors that will determine if you will get approved for this loan?

Not only this, but your credit score can affect your life in innumerable ways. This is why it is imperative to do everything you possibly can to maintain an excellent credit score throughout your lifetime. However, in order to do that you need to know the things that will affect your credit score, and that is what you will learn below.

Missed Of Skipped Payments

You would be surprised at the large number of consumers that miss credit payments, just because they can’t keep up with all their bills. It is not that they do not have the money to make the payments, but they just lose track of everything. Even if you start making the payments right after their due dates, the fact that you missed the payments at all is going to look bad and you will be penalized for it on your credit report. This is why it is imperative that you keep track of all your debts and ensure everything is paid in a timely manner. This type of mistake can remain on your credit history for seven years or longer, so it is a costly mistake that must be avoided.

Turned Over To Collection Agencies

If you let your debts go for a long period of time it is highly likely that your creditors will turn your debt over to a collection agency. The creditor will either try to get the collection agency to collect the payment from you, or they will simply sell your debt to the collection agency. Whatever the situation is, it truly does not matter because either of these situations will hurt your credit score. Those negatives could remain present on your credit history for seven years of longer.

Late Payments 

Late payments can also affect your credit score. Late payments are listed on the report 30, 60 and 90 days past due. Older negative items listed on the credit report do not impact the score as much, but every negative will drive down the score. You probably want to know how long late payments stay on your credit report. Many consumers desire to know the answer to this question and it is simple, as late payments remain on the credit report for seven years from the initial date they occur.

Repossession Of Property

If you cannot make payments on your car or home, there might come a time when the creditor has to repossess the property. This is something that you want to avoid at all costs, because it tells other creditors that you are not capable of making payments. In fact, when you have a reported repossession on your record, it looks much worse than a missed or late payment.


There may come a time when you are no longer able to manage your debts, which can lead to declaring bankruptcy. With that being said, you need to be aware of the fact that there are several different forms of bankruptcy and each one works in a different manner. For instance, when you file Chapter 7 bankruptcy, none of the debt that you owe is repaid, which leaves a blemish on your credit score for up to 10 years. 

Amount Of Debt You Have 

Many consumers are not aware of the fact that the amount of debt they have affects their credit score. Well, it is true and your level of debt is about 30 percent of your overall credit score. To tally up your credit score, credit reporting agencies utilize what is known as credit scoring calculation. This method considers your credit utilization, the ratio between your credit limit and credit card balance for all of your credit cards.

Another thing the credit score considers is how close the loan balance is to the initial loan amount. If you want to improve your credit score, you will need to pay your loan balances, which is much easier said than done.

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Jessica Todd Swift
Jessica Todd Swift is the deputy managing editor of the CEOWORLD magazine. She is a veteran business and tech blogger, journalist, and analyst. Jessica is responsible for overseeing newsroom assignments and publishing and providing support to the editor in chief.