Your credit score affects your life in a variety of ways. Your ability to get things such as a job, a car or a loan is often determined by your credit score. Considering its importance, you should know how your actions affect your credit score. You can improve your score or keep it in good standing when you know how credit bureaus determine the rating.
Length of Credit History
The length of your credit history counts for 15 percent of your credit score, according to the University of Minnesota. Older accounts in good standing are viewed more favorably than newer accounts. An old account in good standing shows creditors you can pay your bills responsibly over a period of time.
Payment History
Colorado State University reports that payment history counts for 35 percent of your credit score. A record of recent payments made on time increases your score. It doesn't matter so much if you paid on time in the past -- it's the recent activity that counts the most. So if you fall behind in payments after having paid on time for years, it will still count against you.
Outstanding Debt
Thirty percent of your credit score is determined by how much you owe and your credit limit. If a card has a $500 limit, and you owe $495, then that can hurt your credit score. On the other hand, owing $100 on a credit card with a $500 limit is looked upon more favorably.
New Credit
The Federal Citizen Information Center (FCIC) states that new credit affects 10 percent of your credit score. When you apply for or open several new accounts, it can lower your credit score. Applying or searching for one new account doesn't hurt your score, but applying for several may have a negative effect. The FCIC recommends applying for new accounts within a 30-day period to avoid hurting your score.
Credit in Use
Ten percent of your credit score comes from the types of credit you have. Credit cards from major lenders, such as Visa or Discover, are viewed more favorably than loans from finance companies. However, having more than two or three major credit cards or loans open at once can lower your score as well.
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