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The first step to determine what's hurting your credit score is to check your credit reports, ideally from each credit bureau, to understand the risk factors that may be affecting it. When reviewing your credit report, look for late payments, accounts in collections, defaults, foreclosures and bankruptcies, all of which may hurt your credit score.
Also check your credit scores for free to receive an even more detailed overview of the factors that may be negatively influencing it, such as your outstanding credit card balances or credit mix. Here's what to look out for.
How Can I See What Is Affecting My Credit Score?
You can see what's impacting your credit score by checking your credit reports and credit scores. Follow these steps.
Get Your Free Credit Report From Each Credit Bureau
Since lenders aren't required to report your account details to all three credit bureaus (Experian, TransUnion and Equifax), it's important to look at your credit report from each bureau so you can view all account information available. You can get a free copy of each of your credit reports once per week at AnnualCreditReport.com. You can also get your Experian credit report for free anytime by signing up for a free Experian account.
Check Your Credit Scores for Free
You can get your FICO® Score☉ Θ for free through Experian anytime. You can also check your scores with the other credit bureaus, on free score websites and through your credit card issuer or lender. Since the score type (FICO or VantageScore® ) and version you receive can vary using these methods, your scores will likely differ. Knowing which credit report a given score is based on, and which accounts appear on that report, will help you understand which accounts may be hurting your credit.
Learn more: How Do I Check My Credit Score?
Review Your Risk Factors
Depending on where and how you view your credit report, you may see a section on it called "collections," which will list accounts in collections, or "derogatory marks," which will list negative items such as late payments. Collection items and derogatory marks will all affect your credit score, so if they appear, they're likely having a negative impact.
Checking your credit score will give you a more comprehensive picture. Your score will come with risk factor statements that describe what's having the most negative effect on your scores, such as "short account history" or "too many inquiries." They'll likely be listed in order of importance, with the most significant first. Use those risk factors to better understand how lenders might evaluate you and to identify actions to take, such as keeping your oldest account open or avoiding new credit applications, to improve your score.
What Can Hurt Your Credit Score
Here are some of the common factors that negatively impact your FICO® Score:
- Late or missed payments: The most important factor in your credit score is payment history, which makes up 35% of your FICO® Score. If you make just one credit card or loan payment more than 30 days late, your score could drop significantly, especially if you don't have any other negative marks on your credit report. Late payments remain on your credit report for up to seven years.
- Defaults and accounts in collections: If you don't make payments toward a debt for at least 120 days, it generally goes into default, and your lender will send it to a debt collector. Accounts in collections will stay on your credit report for seven years, starting from the date the lender reported your first late payment leading to default.
- High credit utilization: Your credit utilization rate is the proportion of a credit card's credit limit that you're currently using. Your credit score will generally suffer more negative consequences once credit utilization on a particular account—and across all your accounts—approaches and exceeds 30%.
- Short account history or new accounts: Typically, the more time you've been successfully managing credit card and loan accounts, the less of a default risk credit scoring algorithms and lenders will consider you. If you have a thin credit file (only a few credit accounts) or you've recently opened new accounts, that could harm your score.
- Too many hard inquiries: A hard credit inquiry is a record of your application for a credit card, loan, higher credit limit on an existing card or, potentially, a rental apartment. It will appear on your credit report for two years and can lead to a temporary drop in your credit score (its effect on your FICO® Score lasts a year at most).
- Bankruptcy and foreclosure: Events like bankruptcy and foreclosure will be listed on your credit report and can affect your scores for seven years (or 10 years in the case of Chapter 7 bankruptcy).
How to Improve Your Credit Score
To improve your credit score, use the risk factors listed alongside your score as a guide to determine what to do next. Here are some areas to focus on:
- Pay all your bills on time. Since payment history is a critical factor in your score, prioritize never missing a payment. Set up automatic bill payments on your accounts and make sure you have enough money in your checking account each month to cover your bills.
- Bring any past-due accounts current. Lenders want to see that you can manage the debt you have before you take on new credit. If you have an account that is past due, the first step is to bring that account back into good standing by paying the outstanding balance or working with the creditor to get a payment extension or forbearance.
- Keep credit utilization under 10%. Those with the highest credit scores tend to have credit utilization not only below the recommended 30%, but even lower—typically in the single digits. Aim to never charge more than 10% of your credit limit to each of your credit cards, and keep overall utilization under 10% on all your cards, to have the best chance at a good or excellent credit score.
- Keep old accounts open. Credit cards can stay open indefinitely. If you close your oldest credit card account, you'll lose its long credit history (and its credit limit, which could increase your credit utilization rate and hurt scores). Plan to keep your oldest credit card open and active by occasionally making small charges to it and paying them off right away.
- Limit new credit applications. Since hard inquiries and new accounts can temporarily hurt your score, only apply for credit when you truly need it.
The Bottom Line
When you view your free credit report and score, you'll build an understanding of how your account status, payment history and credit usage all contribute to your current credit score. This is just a snapshot, though: You have the ability to improve your credit score at any time by making positive changes like limiting debt and making on-time payments.
If your score is suffering from a lack of credit experience, you can also seek out a credit-builder loan or secured credit card to add payment history, and a record of your responsible credit behavior, to your credit report.