A credit score is an important part of our lives, It helps us do many things such as buy cars, own homes, take vacations, and much more. Having a good credit score can increase your chances of approval for your loan and usually get you the best terms.

Having lenders offer you good terms can save you thousands on your loans, so its important to understand all the variables that might impact your credit score:

Public records: Public records may impact your creditworthiness and your financial health. Negative public records such as bankruptcies, tax liens, and judgments against you can be a big flag to credit bureaus which will lower your credit score.

Bankruptcy is where an individual or business declared that they will not be able to pay their debt, which can stay on your record for 10 years lowering your credit score and making it difficult to obtain a loan. Another public record that might affect your credit score is tax liens which are unpaid taxes for your property or other assets.

Same as bankruptcies tax liens will stay on your record for 10 years and can cause damage to your credit score. Having a judgment against you for unpaid debts can remain on your credit for 7 years which also will affect your chances of getting loans.

To maintain a healthy credit score it’s important to pay all of your bills on time and avoid negative public records that can hurt your credit score. 

Errors on credit report: Having the wrong information on your credit report can negatively impact your credit score w, affecting your ability to get a loan. Errors can occur due to reasons like data entry errors, identity theft, or creditor reporting inaccurate information. It’s important to constantly monitor your credit account to make sure all the information is accurate and up to date.

You can obtain a free credit check each year from the three major credit bureaus such as Equifax, Experian, and TransUnion by just visiting AnnualCreditReoprt.com. If you end up finding eros on your credit report it’s important to dispute them with a credit reporting agency as soon as you can, you can submit a letter to the credit bureau that contains that information.

In the letter, you need to include your personal information, details of the error, and any documents that can prove the errors. Disputing errors can take time and effort but it’s an important step to maintaining a healthy credit score. 

Unpaid Debts: Having unpaid debts can play a role in your credit score. Many borrowers only think about the large debts they have such as car loans, mortgages or credit cards help them maintain their credit score.

But having small unpaid debts can affect your credit scores things such as medical bills, utility bills, phone bills, parking tickers, and other similar debts. While these might seem like they aren’t that important they can have a significant impact on your credit score if left unpaid.

One of the main factors that credit bureaus consider when determining your creditworthiness is payment history, so having an unpaid account on your credit report can play a significant role in your credit score. 

Credit utilization: Credit Utilization will be the amount of credit you have compared to your credit limits. It’s suggested by credit bureaus and financial experts to keep your credit utilization rate below 30% to maintain a good credit score.

High credit utilization can indicate reliance on credit which will result in difficulty obtaining credit and can result in higher interest rates. Regularly monitoring and adjusting your credit balances can help maintain low credit utilization which will demonstrate responsible borrowing.

For example, if you have a credit limit of $10,000 it’s advanced to have a balance of $3,000 or less to keep your credit utilization ratio to 30%. Maintaining a low credit utilization will help you improve your credit score and demonstrate to the lender that you’re a responsible borrower. 

Other things: Many other things can affect your credit score and it’s important to learn more about everything that can affect your credit score to avoid making mistakes. Having good credit can be super beneficial for all buyers as it will increase the chances of approvals and usually help you get the best terms.

Here are a few other things to consider that might affect your credit score age of the account, payment frequency, credit inquiries, types of credit, and much more. Many things will affect your credit, but making sure you don’t overspend and pay your bills on time will help you maintain a good credit score.