5 Things That May Affect Your Credit Score

by Finance 20 May 2023

Credit Score

If you’ve ever tried to purchase a vehicle, rent a home, or even apply for a credit card, then you likely know the importance of a good credit score. A high credit score comes with all kinds of opportunities. But just because you have a good credit score now doesn’t mean you always will, especially if you don’t know what to look out for.

Below, we‘ve compiled a list of five things you may not know can impact your credit score. Check them out!

Making a late payment

Making a late payment – even just one time – can negatively impact your credit score. This is because your payment history on loans and credit card accounts is used to calculate your credit score. Late payments on a credit card are those made more than 30 days past the deadline.

At this point, your credit card issuer will likely notify credit-reporting agencies of your missed payment, which will decrease your credit score and can remain on your record for many years.

Applying for more credit

Any time you apply for credit, whether you’re applying for a new credit card or a mortgage – a hard inquiry is made on your account. Every hard inquiry affects your credit score. The more hard inquiries you rack up, especially several in a short period, the more your credit score can decrease.

Applying for a lot of credit in a short span of time can signal to lenders that you are a high-risk borrower.

Closing a credit card

If your credit score is low, you might be inclined to think that closing a credit card account that’s been paid in full can help you raise your score. The reality is that closing a credit card account will impact your debt-to-credit utilization ratio, the variety of credit accounts on your credit report, and the length of your credit history.

Generally speaking, lenders see it as a green flag when a borrower can properly handle multiple credit accounts over a long period of time. They also tend to prefer longer credit histories over shorter ones and low debt-to-credit utilization ratios. 

Holding high credit card balances

The higher your credit card balances, the more at risk you are of a decreased credit score. If your credit card balances are consistently approaching your credit limit, it means your credit utilization ratio is high, and your credit score may be lowered as a result. The general rule of thumb is to keep your debt-to-credit utilization ratio as low as possible. 

Again, you might think that the best way to raise your credit score is to cease the use of credit cards and other credit-related accounts. But this results in little to no credit history, which makes it more difficult for creditors and lenders to assess your application for credit. As mentioned above, the longer the credit history you have, the better off you will be.


Sumona is a persona, having a colossal interest in writing blogs and other jones of calligraphies. In terms of her professional commitments, she carries out sharing sentient blogs by maintaining top-to-toe SEO aspects. Follow more of her contributions at SmartBusinessDaily and FollowtheFashion

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