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What Impacts Your Credit Score? - TICKET TO FI

What Impacts Your Credit Score?

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Credit Score Ticket to FI

Getting your personal finances in order can be a scary task. We want to help make it easier by breaking it down into more actionable steps. This week we want to talk about your credit score, specifically what impacts your credit score.

Let’s start with the basics.

What is a Credit Score?

Your credit score is a financial snapshot of all of your debt and payment history that lenders use to judge if you are financially suitable to borrow and pay back the money they will lend you. 

These companies or lenders will pull your credit report and credit score to compare against their criteria and either approve, deny, or approve with stipulations. 

You will actually have three separate credit scores from three separate reporting agencies: TransUnion, Equifax, and Experian. They should all be around the same number but different companies will use different numbers. Sometimes they use the lowest number or the middle number. More often than not, they will not choose the highest number. 

Your credit score can range anywhere from a 300-850 with the higher the credit score the better. 

America’s average credit score is 703 according to this great report from Value Penguin by Lending Tree. However, 38% of Americans 30 or younger have less than a 620 credit score which is considered poor.

Here is the general breakdown of credit scores according to Experian, however, this is not a hard and fast rule: 

  • 300-579: Very Poor
  • 580-669: Fair
  • 670-739: Good 
  • 740-799: Very Good 
  • 800-850: Excellent

Why is Your Credit Score Important?

So you may not have gotten A’s in school and yet you still have a good job and live in a nice area, why would a credit score matter?

Having a good credit score can actually help you save money and allow for better opportunities than if you have a fair or poor credit score. 

For example, Nate has great credit and was able to negotiate the security deposit for our current apartment to only $500. If you have average credit, you could be expected to pay one month’s rent for a security deposit ($1250). And if you have poor credit, they may require even more or deny you altogether.

A good credit score can also give you:

  • better home loan terms (e.g. a lower APR or a smaller down payment)
  • a higher credit limit on your credit cards, in turn, lowering your utilization percentage
  • give the opportunity to have fees waived on bank accounts and credit cards
  • lower car insurance rates
  • no or low-security deposits with utility accounts

All of these SAVE YOU MONEY!

What Impacts Your Credit Score?

There are six basic factors that go into your credit score and we’ll review what they are looking for with each. All of this information is pulled from Mint‘s Credit Score section of their site.

High Impact Factors

High Impact factors will affect your score significantly when they start to slip or improve drastically. They are the most important factors for the lenders looking at your credit.

Derogatory Marks

Ideal Score: 0 Marks

A derogatory mark on your credit is considered the worst thing you could do with loaned money. This includes any unpaid balances that have gone to collections (hospital bills, credit cards, mortgages, etc.), liens, and bankruptcies.

Regardless of how they happen to you, or why, these marks will stay on your credit for a minimum of seven years. And will tank your credit score, rightfully so. If you were unable to pay those loans, why would a lender trust you to repay them when they loan you more money?

Payment History 

Ideal Score: 100% Payment History

Next up for lenders, is payment history. Your payment history tracks that you made all your payments on time. This requires that at least the minimum due is paid on time each statement cycle for each of your accounts. There is no penalty for only paying the minimum balance by the due date towards your payment history rather than the statement balance or entire balance.

Even just one missed payment will drop your credit score. All missed payments will stay on your credit report for seven or more years.

Credit Utilization 

Ideal Score: <20%

Credit utilization is how much of your total credit limit is actually being used. They take the total of all your statement balances divided by your total credit limit from your monthly statements.

Lenders like to see that you are not using all of your available credit limit or even close. The recommended amount is less than 30% but the ideal is less than 20%.

The higher your utilization shows that you are reckless and unable to fully control your spending habits, thus at a greater risk of not being able to pay those balances back.

Medium Impact Factors

These have some effect on your credit score but is not the first focus of lenders.

Age of Credit

Ideal Score: 9+ Years

They calculate the average age of all of your accounts. The older your credit, the more history you have shown of responsibly repaying your debts and less likely you are to default on any loans.

Low Impact Factors

It is common to hear advice regarding these two factors of your credit score. However, these have a much lower impact on your score. As long as they are not severely negative, they most likely will only move your score by small increments.

Total Accounts

Ideal Score: 22+ Accounts

This is similar to the age of credit, the more accounts you have (in good standing) the more likely you are to repay your loans in full and on time.

Although this number is quite high, it should be used with the age of credit and opened over time, NOT ALL AT ONCE.

Credit Inquiries

Ideal Score: 0-1 Inquires

A credit inquiry is counted as each time a lender will pull your credit report or score. Only hard inquiries are counted toward this factor in your score. Not all lenders will submit a hard inquiry and pulling your own report (once per year) or number will be considered soft inquiries and not affect your score at all.

Check Your Credit Score

Now that you have a general idea of what impacts your credit score, it’s time to check what yours is! There are plenty of apps and websites that will check your score for you. None of them will give you all three of your credit scores, but you can get 1 or 2 or an average from them.

Just remember, you should never pay for your credit score and it should never result in a hard credit pull. And only give your sensitive information to a site or company that you trust.

Here are some of the most common and easy ways to check your score today!

Credit Cards

If you already have credit cards set up, oftentimes they will come with free credit checks and even credit monitoring! This is a great and trustworthy resource for you to use as they already have all your information and you don’t have to give it out to anyone else.

Credit Karma

Credit Karma is a free app and website that I love to use to check my credit score. They allow you to check your score weekly so you can see progress. They also show you what exactly affected your score week over week.


As you probably know by now, we LOVE Mint. It helps us categorize our spending and organizes everything into one easy to use format. It also checks your credit score and shows where exactly your score is changing and gives tips on how to get back on track.


So now that you know the basics of your credit score and why you have what you have, it’s time to start improving it. That’ll be our next post, I promise.

What is your credit score and how do you keep track of it?

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About US

Hi all! We are Alicia & Nate. We are couple currently living in San Diego learning and teaching the ropes of all things personal finance. We love dogs, chips, and Friends! Hope to see you around! 

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