What Factors Can Negatively Affect Credit Scores? | Equifax® (2024)

FAQs

What are negative factors in credit scores? ›

Here are some common factors that may negatively impact credit scores: Late or missed payments. Collection accounts. Account balances are too high.

Your repayment history

Lenders and other service providers report arrears, missed, late or defaulted payments to the credit reference agencies, which may impact your credit score. This isn't limited to mortgage, credit card, loan, car finance and overdraft payments.

A history of prompt payments of at least the minimum amount due helps your score. Late or missed payments hurt your score. Amounts Owed or Credit Utilization reveals how deeply in debt you are and contributes to determining if you can handle what you owe.

Payment History: 35%

Your payment history carries the most weight in factors that affect your credit score, because it reveals whether you have a history of repaying funds that are loaned to you.

A credit score is a number that depicts a consumer's creditworthiness. FICO scores range from 300 to 850. Factors used to calculate your credit score include repayment history, types of loans, length of credit history, debt utilization, and whether you've applied for new accounts.

Making a Late Payment

Every late payment shows up on your credit score and having a history of late payments combined with closed accounts will negatively impact your credit for quite some time. All you have to do to break this habit is make your payments on time.

The factors that determine your credit score are called The Three C's of Credit – Character, Capital and Capacity.

What is the most important factor of a credit score? ›

Payment history — whether you pay on time or late — is the most important factor of your credit score making up a whopping 35% of your score.

These three factors affect your credit score: Type of debt, new debt, and duration of debt.

Using more of your credit card balance than usual — even if you pay on time — can reduce your score until a new, lower balance is reported the following month. Closed accounts and lower credit limits can also result in lower scores even if your payment behavior has not changed.