What Affects a Credit Report Score?

Banks, credit companies and other businesses use your credit score to determine how reliable you are in repaying debts. If you have a higher score, you may qualify for lower interest rates and thus lower monthly payments. You'll also be more likely to be approved when applying for a loan, such as a home mortgage. A number of factors directly affect your credit report score.

Bill Payments

Whether your bills are paid on time significantly affects your credit score, accounting for about 35 percent of your overall rating, according to the Federal Citizen Information Center. Late or missed payments on phone bills, student loans or credit cards can reduce your credit score, as can declaring bankruptcy. To earn and maintain a high credit score, pay bills in full and on time.

Debt Owed

The amount of debt you've accrued also has a direct effect on your credit rating--nearly 30 percent, according to the FCIC. Rating agencies compare how much you owe on credit cards and other loans to your overall available credit. The greater the difference between what you owe and your available credit, the better. Keep your debt low to maintain a higher score.

Length of History

Accounting for about 15 percent of your overall credit rating, according to the FCIC, the duration of your credit history affects your credit score. The longer you've maintained a line of credit, the better your score will be. Duration is based on your oldest line of credit.

New Credit

The presence of new credit cards and loans determines roughly 10 percent of your credit rating, according to the FCIC. The effect of new credit on your rating depends on the types of credit you add, how many applications for credit you make and the length of time between applications for new credit and loans. Depending on your credit history, adding new lines of credit could hurt your score.

Types of Credit

The types of credit you have also affect your credit rating. If you have a mixture of loans, credit cards and other types of bills on which you make timely payments, this improves your credit score. If you have too many accounts of the same type--such as several credit cards on which you carry a balance--this can reduce your score.

Checking Your Score

Each individual is entitled to a free report of his credit score once a year from the three major credit bureaus: Equifax, Experian and TransUnion. Obtain your free credit score report from Annualcreditreport.com (see Resources).