Things that affect your credit score

Maintaining a good credit score is one of the most important steps you can take to ensure your financial well-being. Without a good credit score, you may not qualify to rent an apartment in your name, secure a credit card or auto loan, or buy a house. And if you are able to get a loan or credit card, a better credit score will typically mean a lower interest rate.

Take this test to see which things can impact your credit score and what you can do about it.

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Just one late credit card payment can negatively impact your credit score.

True

False

Correct. Payment history makes up 35% of your credit score, and just one late payment can have a significant impact on your credit score. Late payments are typically added to your credit report when they are more than 30 days past due and they can remain on your credit report for up to seven years. The better your credit score, the more it's likely to drop as the result of one late payment.

Tip: Set up automatic bill pay to avoid unnecessarily missing payments.

Incorrect. Payment history makes up 35% of your credit score, and just one late payment can have a significant impact on your credit score. Late payments are typically added to your credit report when they are more than 30 days past due and they can remain on your credit report for up to seven years. The better your credit score, the more it's likely to drop as the result of one late payment.

Tip: Set up automatic bill pay to avoid unnecessarily missing payments.

Your rental payment history doesn't impact your credit.

True

False

Correct. While your on-time rent payments aren't generally factored into your credit score, your landlord can report late payments, which will harm your credit.

Tip: For a small fee, companies such as Rental Kharma¹ and RentTrack² can report your on-time rental payments to the major credit bureaus. This can help boost your credit score.

Incorrect. While your on-time rent payments aren't generally factored into your credit score, your landlord can report late payments, which will harm your credit.

Tip: For a small fee, companies such as Rental Kharma¹ and RentTrack² can report your on-time rental payments to the major credit bureaus. This can help boost your credit score.

Once you have bad credit, you can't make it better.

True

False

Correct. Your credit score will continue to change as your level of debt and payment history change. Every positive step you take can help you rebuild your credit, even after a significant setback.

Tip: Paying off debt, paying your bills on time, and fixing mistakes on your credit report can help you build your credit.

Incorrect. Your credit score will continue to change as your level of debt and payment history change. Every positive step you take can help you rebuild your credit, even after a significant setback.

Tip: Paying off debt, paying your bills on time, and fixing mistakes on your credit report can help you build your credit.

Applying for multiple credit cards can decrease your credit score.

True

False

Correct. Each time you apply for a loan or a credit card, you'll incur a hard inquiry on your credit report. Since credit score inquiries and new accounts contribute to roughly 10% of your credit score,³ several inquiries and new credit accounts in a short period can lead to a drop.

Tip: Before you apply for a loan or credit card, check your credit score⁴ to see if it's within the acceptable range for the lender. That way, you're only incurring a hard inquiry for a credit card or loan you're likely to get.

Incorrect. Each time you apply for a loan or a credit card, you'll incur a hard inquiry on your credit report. Since credit score inquiries and new accounts contribute to roughly 10% of your credit score,³ several inquiries and new credit accounts in a short period can lead to a drop.

Canceling a credit card can improve your credit score.

True

False

Correct. Credit utilization (the percentage of your total available credit that you're using) accounts for 30% of your credit score. When you close a credit card account, you decrease your available credit and thereby increase your credit utilization.

Tip: Instead of closing credit cards, lock those that you no longer want to use (this can typically be done in your card account settings). This will remove the temptation to use it and prevent unauthorized use.

Incorrect. Credit utilization (the percentage of your total available credit that you're using) accounts for 30% of your credit score. When you close a credit card account, you decrease your available credit and thereby increase your credit utilization.

Using your credit card frequently won't impact your credit score -- as long as you pay off your balance in full every month.

True

False

Correct. Your credit utilization (the percentage of your available credit that you're using) makes up 30% of your total credit score. Since your credit card balance is typically reported to the credit bureaus right after your statement closes⁵ (not on the payment due date), charging a lot (even if you pay it off in full every month) can make it look like you have a lot of debt and are using most of your available credit.

Tip: To avoid having a high credit utilization, try paying down your balance twice a month instead of just once.

Incorrect. Your credit utilization (the percentage of your available credit that you're using) makes up 30% of your total credit score. Since your credit card balance is typically reported to the credit bureaus right after your statement closes⁵ (not on the payment due date), charging a lot (even if you pay it off in full every month) can make it look like you have a lot of debt and are using most of your available credit.

Tip: To avoid having a high credit utilization, try paying down your balance twice a month instead of just once.

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You still have some learning to do when it comes to maintaining a healthy credit score. But no worries: we can help you break down how your credit score is calculated. If you're struggling with little or no credit history, learn how to get on your way to building the solid credit history you need to realize your financial dreams.

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You know some of the ways to maintain a healthy credit score, but there's room for growth. Here's some tips for how to boost your credit score, and some things to watch out for because they can hurt your credit score.

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Congratulations! You're savvy about credit scores. Stay on top of your credit score by learning how the various FICO models calculate it. And be sure to continue to protect your credit score by reviewing your credit report regularly.