It’s no secret that your credit score has a big impact on your financial activity. It’s considered by many entities the key factor that determines your financial health. For instance, a credit score is used by lenders to decide whether to give you a loan and by credit card companies to determine if you’re eligible for credit.

When something is potentially vital to your financial future, it’s important to understand how a credit score can best represent your creditworthiness. This means knowing how to maintain healthy credit. Read on to learn about what impacts your credit score.

What is a credit score?

Your credit score is a three-digit number that lenders use to help them decide how likely you are to repay your debts. It’s based on information in your credit report, including how much credit you’ve been granted, how much you currently owe and how frequently you’ve repaid past debts on time.

A high credit score means you’re a low-risk borrower, which could lead to a lower interest rate on a loan or mortgage. A low credit score could mean you’ll have to pay higher interest rates or maybe not be approved for a loan at all.

The good news is that you can always improve your credit score if it’s lower than you’d like. Simple changes such as paying your bills on time, using less than 30% of your available credit and maintaining old accounts in good standing can make a big difference.

What impacts your credit score?

An important part of maintaining good credit is understanding what goes into your credit score and what can affect its rise or fall. Our financial experts at Solarity Credit Union have put together a quick guide to the five factors that have the greatest impact on your credit score:

  1. Payment history: This looks at whether you have paid your bills on time in the past. Late payments can damage your credit score, while regular, on-time payments can help improve it. Make sure to always pay your bills on time to maintain a good credit score.

  2. Credit history: Your credit history is an overview of how long you have had credit accounts and how often you have used them. A long credit history helps improve your score, while a short credit history can damage it. Try to keep your credit history as long as possible by using credit accounts responsibly. Keeping a credit account you’ve had for a long time open, even if you never use it, is your best strategy.

  3. Current debt: This pertains to the total amount of debt you currently owe. The more debt you owe, the lower your credit score will be. Try to keep your debt levels low to maintain a good credit score.

  4. Types of credit on your report: This factor involves the different types of credit you have on your report. There are three main types: installment, revolving, and open. The more of these you have, the better your credit score will be. Try to have a little of each.

  5. New credit inquiries: New credit inquiries also affect your credit rating. Banks look at how many new credit inquiries you have in the past six months. Too many new inquiries can damage your credit score so try not to apply for too much new credit in a short period of time.

By understanding these five factors, you can work to maintain or improve your credit score and get on the path to good credit history. Follow these tips and you’ll be on your way to a better financial future.

What really does and does not influence your credit score?

One of the most common myths about credit scores is that certain actions will automatically lower your score. This can include having a low income, being unemployed or being blacklisted. However, none of these factors actually has any bearing on your credit score.

People often falsely believe a few other things affect their credit score. For example, making late payments on bills doesn’t actually hurt your score—as long as you eventually catch up on your payments. And having a lot of debt doesn’t always mean you’ll have a low credit score—it really depends on how well you manage that debt.

So what does affect your credit score? Basically, anything to do with your financial history. This includes what we discussed above: how long you’ve had credit, how often you pay your bills on time and how much debt you have compared to your current income. So if you want to improve your credit score, focus on building a strong payment history and keeping your debt-to-income ratio under 43%.

And remember, if you have any questions about your credit score or need help improving it, you can contact an expert at Solarity or explore the helpful resources on our website.

What credit score do you need to buy a house?

A credit score is needed to buy a house because, as we’ve mentioned, it’s one factor that lenders use to determine whether or not you are a good candidate for a mortgage loan. The higher your credit score, the better your chances of getting approved for a loan and, typically, the lower your interest rate. In general, you’ll need a credit score of at least 620 to qualify for a conventional mortgage loan and a score of 740 or above to qualify for the best terms and rates on a mortgage loan.

If you’re looking to buy a home, be sure to check your credit score and work on improving it before you begin the mortgage application process. A higher credit score will give you a better chance of getting approved for a loan with excellent terms.


Most people aren’t aware of their credit score until they apply for a loan. Even then, they may not know what their score is or how it was calculated. This lack of awareness can cost you money in the form of higher interest rates on loans.

Knowing what impacts your credit score is vital to making sure you maintain a healthy one. Now that you’re familiar with what you need to do to keep your credit score high, when it comes time to get a mortgage, you’ll be ready to get started.

Our team at Solarity is made up of experts who can help you make the most of your credit score. If you want more information on what impacts your credit score and much more, check out the Solarity Credit Union website.

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