We recently wrote a blog post on the 3-digit number that you’ll always be judged by. That’s your credit score. 

Potential lenders for mortgages, business and personal loans, credit cards and even employers or landlords all have access to your credit score—and can see your ability to manage money and pay back their loan. Your credit score carries a lot of weight either for or against you and your financial plans for the future. 

Let’s discover the key factors that affect your credit score and find out how to improve your current situation. 

5 factors affecting your credit score right now


  • Payment history


According to Experian credit reporting, your payment history accounts for 35% of your credit score. That means that missed credit card payments or late monthly bill payments could have a significant and negative impact on your score. This is because lenders, such as major banks, want to ensure that you will pay back any debt you eventually have with them in a timely and responsible manner. 


Tip #1:

Start paying off your minimum monthly payments on time and watch your credit score increase over time. 


  • Debt 


How much debt you carry is an important part of calculating your credit score. This considers the overall amount of debt you have across all accounts, including student debt, mortgages, car loans, credit cards and outstanding bills. If you have negative debt information on your credit report, such as a consumer proposal, bankruptcy, foreclosures or collection accounts, this will impact your score further. 


Tip #2:

Make a budget and plan to pay off your debt as fast as possible. Consider using Marble’s Score-Up product to find out which debts hurt you the most—and you should pay off first. 


  • Credit use


Interestingly, how much you use your credit card can affect your credit score too. For example, if you’ve maxed out of your credit card or have more credit card debt than an available balance, that will negatively impact your score. According to The Balance, try to keep your credit card use at 30% of less. If you have an available credit limit of $10,000, never carry more than $3,000 balance on it.  

Likewise, for loans, the ratio of your remaining student loan balance, for example, to the original loan amount is important. In other words, show that you can—and are—paying off your loans.  


Tip #3:

Use your credit cards but only as much as you can pay off every month. 


  • Credit diversity 


Credit diversity, age of credit, and credit type are also all important factors affecting your credit score right now. Show lenders that you can properly manage several different accounts and types of accounts at once. If you have multiple credit cards that you actually use, plus a car loan and a mortgage, for example, (and you pay the minimum payments off on time every month) this will help your credit score. Also, the longer that you’ve been improving credit the better. 


Tip #4:

Show that you’ve been managing accounts responsibly for a long time (and don’t cancel long-running credit cards or open too many unnecessary new ones that you might not use).


  • Hard inquiries


Whereas a hard credit inquiry could impact and stay on your credit report for approximately two years, a soft inquiry doesn’t affect your score at all. What’s the difference

A hard inquiry is usually done by a financial institution if, for example, you require a loan or new credit. For example, if you apply for a mortgage for a house or want to open a new credit card, you would most likely authorize a credit check. This may or may not affect your score by a few points. 

A soft credit inquiry, on the other hand, can occur without your consent by an employer or even by you online. This won’t affect your credit score and is a good thing to do to stay on top of how your credit is performing. 


Tip #5:

Space out your hard inquiries to lessen their impact on your credit score. For example, open a new credit account several months before applying for a mortgage. 


Learn more about how to improve your credit score with Marble Financial


About Marble Financial Inc. At Marble Financial (CSE: MRBL; OTCQB: MRBLF) we are a group of forward-thinking financial technology experts that understand Canadian’s occasionally need help in achieving longer-term credit health. Through our industry-leading proprietary technology solutions Fast Track Loan, Score Up, and Credit Meds, we guide our customers back to mainstream credit 50% quicker than traditional methods. Since 2016, We are proud to have empowered thousands of Canadians to a positive financial future and continue to establish ourselves as a leader in financial wellness.