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"When you know better you do better...credit scores" - Factors that affect credit scores


We've all heard that we should make sure to pay bills on time and to try not to open too many credit lines at once helps maintain healthy credit. Also checking our credit reports at least annually for errors can assist in identifying and removing discrepancies that impact our credit history. Working towards and maintaining a good credit score can help us get better rates and on loans, credit card offers, and better limits on those loans. It’s important to understand which factors affect our credit score since we have control over many of these factors. Here are five lesser-known factors that can affect credit scores.

1. Eliminating all types of debt

Unless you’re certain you’ll be living a debt-free lifestyle for several years to come and won’t need to apply for credit for any reason, you’ll want to hold on to at least one loan and one credit card account. This is because you need some sort of active credit history to maintain a healthy credit score. Show on-time payments and plenty of available credit from a variety of sources and types. These types of activities are some factors that contribute to a high credit score.

2. Closing out unused credit card accounts

Even though you’ve worked hard to pay off credit card balances and have been good about maintaining a zero balance on the account, it's important that you know you shouldn’t jump on the chance to close accounts entirely. Your credit score may improve when you have open lines of credit that are left unused because your credit utilization ratio will be lower — an important factor that affects the credit score.

Keep old, unused accounts open, because they show valuable history and improve credit utilization ratio.

3. Unpaid parking tickets or library fines