How Time Affects Your Credit Score

A credit score provides a rating based off a consumer's credit report. Most lenders use a consumer's credit score to determine whether or not to extend a new line of credit. Credit scores also play a factor in the type of interest rate a consumer gets on a credit card or loan. Credit scores change with time and include factors such as payment history and debt.

Credit Score Factors

The credit bureaus take information from a consumer's credit report and divide it into five categories. These categories make up a consumer's credit score. Payment history counts for 35 percent of a consumer's credit score, total debt accounts for 30 percent, length of credit history accounts for 15 percent, recent credit applications accounts for 10 percent and types of credit accounts for 10 percent, according to myFICO. Credit scores change over time as the consumer's credit history lengthens.

Positive Information

Certain factors, such as paying a bill on time or paying down credit card debt, typically have the largest positive impact on a credit score. Other factors, such as opening a new credit card or developing a blended credit profile through a mix of loans and credit cards have a smaller positive impact on a credit score. Consumers with a limited credit history will see their scores improve over time as they add credit cards and loan accounts, increasing their length of their credit history. Positive information remains on a credit report as long as the account stays open. After the consumer closes the account, the positive information will stay on their report for 10 years, according to Bankrate.

Negative Information

Certain actions, such as filing for bankruptcy or an unpaid credit card account turning into a collection will have a large negative impact on a credit score. Smaller actions, such as missing a credit card payment or increasing debt will also have a negative effect on a credit score but consumers with a longer credit history or several positive accounts will see less of a drop in their scores. As the negative remark ages, it will have less of an effect on the consumer's credit score. Negative information, such as a late payment on a credit card, remains on a consumer's credit report for seven years.

Tips

Consumers can check their own credit report without affecting their credit score. By law, TransUnion, Equifax and Experian have to supply every consumer with a free copy of their credit report each year. Consumers can order their credit reports online through Annual Credit Report. Consumers can purchase a copy of their credit score for a small fee through each of the credit bureaus directly.