April 20, 2016

4 Things that Impact Your Credit Score the Most

Written By Jack Ryder
Last updated December 13, 2018

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Simple. Thrifty. Living.

Most people find it difficult to get a competitive loan for a large purchase, such as a home, new furniture or a car unless they have an excellent credit score. It is wise to plan ahead if you are saving for a large purchase in the future. Avoiding the things that impact your credit score negatively can help keep your payments and interest rates down and enable you to pay off your debts more rapidly.

A late payment once a year isn’t going to greatly impact your credit score. However, frequent late payments can drastically decrease it. Always make your payments on time or early in order to keep your credit score as high as possible. Paying them online is an excellent way to schedule the payment and prevent delays due to snail mail. Making timely payments shows future creditors that you can be trusted to pay consistently and on time.

You may feel that having multiple credit cards will decrease your credit score, but this isn’t necessarily true. What matters most is your credit to debt ratio. For instance, if you have credit cards where you can accrue up to $10,000 in debt, but you only owe $2,500, your credit to debt ratio is only 25 percent and this increases your credit score. You can increase your ratio by getting approved for a new credit card.

Although paying for everything with cash from a young age is quite admirable, it also can result in no credit history. In today’s world, a credit history is almost always necessary to buy real estate or other expensive purchases. Even if you don’t need a credit card, it behooves you to apply for one in your early 20s. If you don’t want to use it, simply pay for the gas in your car with a credit card once a month and then pay it in full each month. This is a fabulous way to establish credit history without going into debt. It is also wise to have more than one type of credit. For instance, if you need a new lawn mower or recliner, you could obtain a charge account at a retail or furniture store and pay it in full after making the purchase.

If you have several credit cards and are weary of the temptation of charging items and then paying high interest rates, you may decide to pay off and close the accounts. It is best to wait and do this after you obtain the loan for the large purchase. Closing the accounts all at once decreases your credit score and may affect the interest rates on your loan.

If you need help improving your credit score, think about using one of the credit repair companies available to do some of the heavy lifting for you.

About the Author

Jack Ryder

Jack Ryder has been working as a reporter and writer in the personal finance space for many years. He enjoys breaking down complicated finance information into easy-to-read articles, so his readers can better navigate their financial lives. He is currently the Editor of the Credit Repair and Debt Relief categories, although enjoys writing about all things finance. Jack has had articles appear in publications from the Huffington Post to Business Insider. You can contact Jack at

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