Factors Affecting Credit Rating


Credit ratings are reports that lenders use to determine an individual's credit risk. Banks, credit card companies and other lenders retrieve credit ratings on people from credit reporting agencies. Credit reporting agencies use various factors to determine credit ratings. These factors can range from credit history to current debt.

Past Credit

An individual's credit history is kept on record for years. Credit agencies use a series of checks and balances to determine a person's credit rating based on this history.

Lines of Credit

Having open lines of credit is considered a good thing because it means a person has established credit. However, too much credit can negatively affect a credit rating because lenders may consider an individual with too many lines of credit a potential risk.

Bill Paying

Paying bills on time is the most important factor when determining a credit rating. Late or delinquent payments can lower a credit rating dramatically.

Current Debt

Outstanding debt plays a part in determining a credit rating. If an individual has numerous lines of credit or multiple credit cards at or near their maximum lending limit, it can lower a credit score.

Credit Applications

When a credit report has multiple credit checks or applications for credit in a short period of time, it sends up red flags to lenders. Adversely, closing multiple lines of credit rapidly is also cause for concern among lenders.


The US Consumer Protection Credit Protection Act forbids credit reporting agencies from using your employment history as a consideration in credit rating. But most lenders use employment history in conjunction with credit reports to determine credit worthiness.

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