Depending on when you make a payment, when the company reports it to Equifax, when Equifax makes the update on your file, and when you received your refreshed score, your score could fluctuate even if you haven't done anything differently.
Although Borrowell doesn't calculate your credit score and we receive your credit information directly from Equifax, we understand credit scores can be complex and want to provide you with some helpful information.
There are five main things that impact your overall score:
- Your payment history determines 35% of your score.
- Review the payment details of each of your open accounts on your credit report to look for any reported late payments by a lender
- Review your credit report for any new collection, legal item, or insolvency
- Your credit utilization which is how much credit you've used out of what's available to you determines 30% of your score.
- Review the reported balances of your revolving credit on your credit report (i.e. credit cards and line of credit of balances). The higher the balance, the more negatively it affects your credit score
- Did you close or decrease the credit limit on a credit card or line of credit? Doing so could increase your credit utilization ratio since the total credit available to you is now less.
- Does your credit report show a $0 balance on all your open credit cards and line of credits? A zero utilization could cause a small drop to your credit score. This is because Equifax's model assumes you haven't used revolving credit recently for them to assess your creditworthiness. If you have been using your credit, it can take some time for the balance to reflect on your credit report.
- Length of credit history determines 15% of your score.
- Did you recently close an account? Your credit history is determined by the first age of your oldest account and the average age of your combined accounts. The older your accounts, the more it helps your credit score.
- Number of hard inquiries/credit checks to receive further credit determines 10% of your score.
- Review the "Inquiries" section on your credit report for hard credit checks made by lenders. Hard inquiries occur when a financial institution checks your credit to make a lending decision.
- Review for new accounts that started showing up based on new credit you've taken on. Sometimes an inquiry might not be reported to the bureau, but your credit score will still be impacted since you've taken on new credit.
- The credit impact for a new inquiry is only short term. You may see your score improve as you continue to show a positive payment history and have the account open for longer to build your credit history.
- Your credit variety (mix of loans, credit cards, phone bill, mortgage etc.) determines 10% of your score.
- Review your credit report to see if any account that was previously on your credit report has dropped off. Accounts normally stay on your credit report for 6 years from the date of last payment or activity (even if closed).
- When an account drops off your report, it could affect the credit variety in your credit file. The less variety you have, the more it decreases your score as the credit bureau likes to see that you can manage a mix of different credit types.
For more information, please see our blog post about why your score may have dropped.