What Lowers Your Credit Score

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When you purchase a vehicle or buy a home, a lender will request a credit score to determine your creditworthiness. A high credit score will yield lower interest rates and lower payments. A low credit score, on the other hand, will yield high interest rates and payments.There are many factors that contribute to having a low credit score. Being aware of these factors can make the difference in your finances.

Making Late Payments

Payment history accounts for 35 percent of your credit history. Thus, making late payments and having collection accounts on your credit report can negatively impact your credit score.

Maxing Out Your Credit Cards

Because 30 percent of your credit score is dedicated to the amount of outstanding debt, having a high ratio of credit used versus credit available has a negative impact on your credit score.

Closing Credit Card Accounts

The length of your credit history accounts for 15 percent of your credit score. Therefore, closing credit card accounts, especially accounts that have been open for years, can lower your credit score.

Applying for Unnecessary Credit

New credit accounts for 10 percent of your credit score, so applying for unnecessary credit causes credit inquires that negatively impact your credit score.

Not Having a Variety of Credit

Because 10 percent of your credit score is based on the types of credit used, having too many department store cards and not having installment loans or automobile loans can lower your credit score.

About the Author

Dee Ferguson has been writing professionally since 1989. Her specialties include arts, business, finance, music publicity and travel. Ferguson's work has been featured on Artistopia.com and various other websites. She has previously worked as a marketing assistant for two major nonprofit organizations. Ferguson holds a Bachelor of Arts degree in journalism from the University of Maryland.

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