What Is a Credit Score Based on?

A person's credit score helps determine whether a bank, credit card company or other lender will offer credit or a loan to a potential client. The higher a credit score, the better; a credit score may even affect employment, as many companies now check credit scores as part of the hiring process.

Payment History

Paying bills on time is one of the most important things an individual can do to improve a credit score; neglecting to pay a bill by its due date will hurt the score.

Too Much Debt

Having multiple credit cards or loans near the maximum lending amount will affect a credit score. Credit debt that is over 20 percent of a person's income raises concerns for many lenders, thereby lowering a credit score.

Length of Credit

The longer a person has had credit in good standing with numerous lenders, the higher the credit score.

Too Much Credit

Having too many accounts open, regardless of their balance, may negatively affect credit reports and scores.

Closing Accounts

If a person closes too many accounts in a short period of time, it reflects poorly on a credit score.

Inquiries

Multiple inquiries (or too many in a short period of time) often will hurt a credit score.

Resources

• Experian Credit Agency