what's a good credit score and how do i achieve it

The Key Factors That Affect Your Credit Score

March 4, 2020 12:16 pm Published by

Your credit score influences every aspect of your financial life, including your ability to get your dream car, apartment or home with the best-quality loan or mortgage. If your credit score is less than stellar, understanding the key factors affecting it is the first step toward making it better and boosting your creditworthiness. 

What’s a Good Credit Score?

Your credit score determines whether lenders will provide funding for a mortgage, a motor vehicle or a business loan. It reflects the risk lenders face if they lend you money. A good credit score impacts your life positively, but a bad score has the opposite effect.

If your credit score is at least 700, it’s considered good. Of course, the higher the score, the better, but at 700 you should qualify for lower interest rates. Keep in mind that lenders have their own criteria for determining a good credit score, but a score of 720 or more is generally considered excellent.

If your credit score is in the 300 to 600 range, that’s a problem. Not only will you have to pay higher rates on any type of loans or credit cards, but the odds of having your loan applications turned down are also greater.

The components that affect your credit score, in descending order of importance, are:

  • Payment history: Even one missed payment can have a negative effect on your credit score. Lenders want to be assured that you will not only pay back your debt, but pay it back on time. Be sure to turn on autopay or set reminders every month for each of your credit cards to be sure you are paying on time.
  • Credit utilization: Your credit utilization of revolving accounts plays a big role in determining your credit score. What does that mean, exactly? Every cardholder has a certain amount of credit available. It is never wise to max out your accounts. Instead, keep your credit utilization at about 30 percent. For example, if you have access to $10,000 in credit, try not to let your monthly bill exceed $3,000. Lenders want to ensure that credit is always used responsibly.
  • Length of credit history: The length of your accounts affects your score, but not as greatly as payment history and utilization. This includes the age of your oldest account, the age of your newest account, and the average of all of your accounts.
  • Credit mix: How well you manage a diverse mix of different credit accounts has an impact on your score. Making timely payments on car loans, credit cards, mortgages or other types of accounts all add up to a varied portfolio that can help you achieve a higher credit score.
  • New credit: The hard inquiry a lender makes after you apply for credit or the total number of new accounts you’ve opened in a span of time can all impact your credit score.

Why Did My Credit Score Drop?

Your credit score may take a hit for a variety of reasons, and the drop can happen fast. Did you miss a payment or was your payment late? If so, expect your credit score to fall.

Sometimes, what seems like a positive can turn into a negative when it comes to your credit score. For example, you probably think paying off your auto or student loan would raise your credit score. After all, that’s debt you no longer have. If those were your only loans, lenders no longer have evidence that you are paying off your debts promptly. That doesn’t mean you shouldn’t pay off such loans, because any dip in your credit score for these reasons is only temporary.

On the other hand, if you’ve filed for bankruptcy, had a lien put on your house or car, or had a court place a civil judgment against you, expect your credit score to plummet. Such incidents obviously indicate serious financial problems, and the credit score reflects those circumstances.

Even closing a credit card account can affect your credit score negatively. That’s especially true if it was your first credit card, because now any other cards have less history as far as lenders are concerned. This, too, should only affect you temporarily, but avoid closing an account if you plan to apply for any sort of loan in the near future.

Improving Your Credit Score

Would you like to know how you can achieve your best possible credit score? The answer is easier than you may imagine. First, if you carry a balance, pay it down. Check your credit report and make sure there are no errors. If so, report them immediately.

Make sure you pay all of your bills on time. That’s every bill, not just credit card payments. Open any type of new credit account, including store cards, only if absolutely necessary. As noted, avoid closing old credit card accounts.

How ScoreMaster Can Help

If you want to boost your credit score, ScoreMaster can help. Use ScoreMaster prior to applying for credit or making payments. We can let you know the best time for making any sort of credit application, including mortgages, automobile loans or credit cards. ScoreMaster will show you how to achieve your best possible credit score with an easy-to-use dashboard that walks you through making the right payment amount at the optimum time. Use ScoreMaster to help you achieve a better rate for any credit cards or loans. You’ll see how many credit score points you can get. Contact us today.

*Legal Disclaimer – ScoreMaster is a patent-pending educational feature simulating credit utilization’s effect on credit scores via payments or spending. Your results may vary and are not guaranteed.


  1. https://www.investopedia.com/financial-edge/1111/what-credit-score-should-you-have.aspx
  2. https://www.moneytalksnews.com/7-fast-ways-raise-your-credit-score/

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This post was written by David B. Coulter

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