Why Are My Credit Scores So Low?

Your credit report and subsequent credit score reflect your lending and payment history. While more severe financial setbacks -- such as bankruptcies, foreclosures and charge-offs -- may lower your score significantly, credit bureaus calculate your score based on numerous factors over years of lending history. Additionally, damaging information hits higher scores harder than lower credit scores that already reflect past financial difficulties.

Payment History

Your payment history influences credit scoring more than any other factor. Late payments and, more importantly, how long the account is delinquent lower your score significantly. The more accounts reflecting missed or late payments, the faster your score drops. Late payments may stay on your credit report for up to seven years. The impact of late or missed payments does fade over time, so older delinquencies lower your score less than newer late payments. Additionally, adding positive payment information helps you recover from the negative influence of a previous poor payment history.

Balances

Major payment delinquencies aside, overall debt compared to your available credit has the second biggest impact on your credit score. Having loans or credit cards with balances near the credit limit indicates financial difficulties or potential difficulties to lenders. As your total debt accounts for 30 percent of your credit score, maintaining high balances may lower your score considerably even if you have a perfect payment history.

Joint Accounts

Generally, your credit report only reflects your payment history. However, if you have a joint account with another person, his account usage does influence your credit score. Having "authorized user" status on a credit card also affects your credit score regardless of your obligation to pay the debt. Excluding couples living in community property states and joint account holders, your spouse's lending history generally does not affect your score.

Errors

Double reporting of negative information, inaccurate reporting or just simple clerical errors may result in a lower credit score, since it is calculated based on the information in your credit report. You can have negative information erased from your credit report if the information is inaccurate. Check your credit report regularly for errors -- federal law allows you one free credit report from each of the three credit-reporting agencies annually as long as you order the reports from annualcreditreport.com. Contact the credit bureau and the lender to have inaccuracies corrected.

Considerations

Credit types and credit inquiries influence your score to a lesser degree. Generally, credit scores increase with a mix of credit types reflecting your experience with a range of lending types. Reduce potentially damaging credit inquiries by spacing new credit applications rather than opening or applying for numerous loans or credit cards within a short period.