13 Surprising Ways to Help Raise Your Credit Score

Besides the top 15 ways to improve your credit score, there are a number of other useful tips you can follow to raise this measure of personal financial health. Some of these are simple things that you might not consider otherwise.

Check if You Are Linked to Another Person

Sometimes another individual’s credit gets tied to your own by mistake. This is easy to correct by filing disputes with the credit reporting bureaus. It can have a massive impact on your score if this individual’s credit is poor. 

Use Your Secured Credit Card Sparingly at First

You want to keep your credit utilization category low. This gives you more points in this second most important category. The credit card company is also more likely to raise your limit or refund your deposit when they see this type of responsible financial behaviour. 

Check for Fraudulent Activity and Fix It

Fraud affected 46 percent of Americans over the past five years, according to electronic payment systems firm ACI Worldwide. If you spot fraudulent activity on your credit report, you need to address this immediately before it becomes more damaging. Requesting a credit freeze is the fastest way to stop the problem from getting any worse. Then you can set about disputing the fraudulent activity.

Move Less Often

Taking on new mortgages continuously can affect you negatively in several ways. You never pay down your mortgage loan. Your credit history average is shortened with each new mortgage as well. By staying in your home and paying your mortgage on time every month, you show the stability and financial responsibility that the credit scoring models love. 

Leave Accounts Open

It can be tempting to close credit cards that you do not use, but this harms you in two categories. Your credit utilization will rise if you lose available credit. This is the second most important category comprising 30 percent of your score. Also closing accounts lowers your average account credit history, a component that makes up 15 percent of your score.

Keep these accounts open, charge small amounts from time to time, and then pay them off every month to improve your score.

Take an Auto Loan and a Mortgage 

The credit mix category amounts to 10 percent of your score. Creditors like to see different kinds of credit that you are keeping up with on your reports. Two categories they especially like are mortgages and car loans. Having these will give you a number of points in this category and also a stronger payment history category (the most important component). 

Pay Your Rent on Time Every Month 

You can ask your property management company to report your monthly rent payments to the credit bureaus. This will improve your payment history category that is the most important component. If your landlord does not offer this service, try signing up for an electronic rent payment service which will guarantee reporting to all three major credit bureaus.

Some of the big names in this industry are Rent Track, Pay Lease, eRent Payment, Pay Your Rent, and Clear Now.

Pay Your Cell Phone and Utility Bills on Time 

Most utilities and cell phone providers will report your payment history to the credit bureaus. This is a good way to build up new credit or rebuild damaged credit. It counts towards the most important component of payment history. 

Get a Personal or Secured Loan 

Another way to improve your credit mix category (10 percent of your score) is by taking out either a personal or secured loan. This will give you another form of credit to show on your report. It could add several key points to your FICO or Vantage Scoring scores. 

Become an Authorized User 

For individuals just starting out with credit, this is a great way for you to establish a payment history. Your parents or a trusted friend can make you an authorized user on one of their credit cards. With each timely payment, you will benefit in the key category of rent payment history. It will also give you a credit utilization component, the second most important category. 

Get Credit for the Bills You Pay 

Make sure that all bills you pay are reporting to one or more of the credit reporting bureaus. You can ask companies to do this if they are not already. Timely rent payment is a very good one to have on your report.

Obtain Store Credit Cards or Student Credit Cards 

Another great way to improve your credit mix component (10 percent of credit scores) is by obtaining store credit. For people who are newly establishing a credit profile, getting a store credit card or student credit card are two of the easier ways to get those all important first accounts approved and open.

Register on the Electoral Roll

This adds another source for your address and contact details to your credit report. Odd as it may seem, it does increase your credit score too, according to Experian.

Top 15 Ways to Positively Impact Your Credit Score

1. Choose a Secured Credit Card and Pay it Off Frequently

Secured credit cards are great tools to help you build up (or rebuild) credit with the three credit reporting agencies Experian, Equifax, and TransUnion. By making a deposit of typically $250-$500, you gain a credit line of the same amount (or sometimes higher). 

You should use the card for purchases then pay it off as often as possible. This will establish good timely paying history, which gives you points in that most important category of payment history (counting for 35 percent of your credit score). 

Remember to keep your credit utilization on the card to less than 30 percent (for the credit utilization component of 30 percent of your credit score)

2. Get More Credit

If you do this judiciously, it can positively impact your credit score. The reason is because more available credit can translate to a lower total credit utilization amount (30 percent of your credit score). The key with this is not to apply for too much credit all at once, as this creates hard inquiries on your credit reports (too many negatively impact your new credit component of 10 percent). 

Try to get different kinds of credit since this impresses the credit bureaus. Store accounts, credit cards, auto loans, and mortgages all contribute to the credit mix category (counting for 10 percent of your score).

3. Raise Your Credit Limits

The more available credit you have, the better you look to the credit scoring algorithms. Your ultimate goal is to keep your credit utilization down to less than 30 percent. This is easier to do when you have $2,000 in total available credit rather than only $1,000. Higher credit limits that you do not overuse show the reporting bureaus that you are more capable of successfully managing debt and credit. 

The credit utilization category is the second most important with FICO and a close third for Vantage Scoring models. 

4. Charge Small Amounts to an Inactive Credit Card

If you allow months or perhaps even years to lapse between charges on an inactive credit card, the issuer will likely close it. This would hurt you in two ways. It would reduce your total available credit, increasing your total credit utilization (the 30 percent component). 

If you have $2,000 charged on $6,000 in available credit, this is 33 percent utilization. Should one of your creditors close a $1,500 card that you do not use then your utilization increases to $2,000 over $4,500, a far higher utilization rate of 44 percent. 

Lower is always better with this utilization number. The 33 percent utilization is almost at the maximum level the scoring models want to see, while 44 percent is definitely considered high and is penalized.

Having an inactive account closed would also lower your credit accounts average age (the credit history component counts for 15 percent). Avoiding this danger is easy. Take any inactive credit cards out when you shop to make at least small routine charges to them. This will keep your creditor happy and improve your credit score.

5. Pay Off High Interest Credit Accounts First

If you are carrying balances on your credit cards, there is a definite strategy to smartly paying them down. You should always attack the highest interest rate balances first. Higher interest charges are increasing the total debt you have each month, damaging your credit utilization component. 

Paying these down first will reduce the amount of time it takes to get your debt erased and under control. 

6. Get a Credit Builder Loan

One of the easier ways to improve your credit score is by varying your credit mix. You can get more points in this component that counts for 10 percent by applying for a credit building loan. Be sure you make all of your loan payments on time, and this will also help out your most important component of timely payment history (35 percent of credit score).

7. Pay Off A Debt

By eliminating one of your debts, you successfully reduce your credit utilization component that counts for 30 percent of your score. This also raises your available credit, a component that Vantage Scoring model considers. It will give you additional points in your most important payment history component as well. 

8. Remove Recent Late Payments

Creditor bureaus are not required to remove late payments unless they are reported mistakenly in error. You can always approach your creditor and ask them to take off a late payment from your credit report though. You can do this over the phone or in writing. 

If the creditor removes the late information, then it will disappear from your credit reports. 

Be sure to provide any good explanations for why you were late. It might be that you suffered a financial hardship like going to the hospital or a natural disaster. The late payment might not have been your fault (and you have documentation to prove the bank error or other cause). 

If you always pay your bills in a timely fashion, explain to them that it was an inadvertent, one time mistake. 

When you have something to offer the creditor in return for helping you out, this may increase their willingness. You can offer to pay down (or off) a loan in exchange. You lose a number of points for a late payment in the payment history component, so anything you can do to get this removed can help you significantly.

9. Remove a Collection Account

Collection accounts equate to charge offs. These cause serious damage to your credit score. You can contact the original creditor and offer to pay them the full balance in exchange for them retracting it from collections. They may be willing to accommodate you to have the debt paid off. At the very least, they will have to report your debt as paid in full when you cover it. 

10. Pay Off a Past Due Balance

Past due balances negatively impact your credit score in the most crucial payment history category (35 percent). The longer they are negative for, the worse they harm your score. The balance will show as current once you bring the account up to date. Paying it off will help your score to improve even more. 

If a past due balance is only an isolated event, FICO will not penalize you for it under their newest algorithm versions FICO 8 and FICO 9.

11. Pay More Than One Time in a Billing Cycle

Paying more frequently (than once in a billing cycle) will help to keep your credit utilization amount down. The reason is that your statement balance is the one reported to the credit bureaus. By reducing this number, you can effectively lower your credit utilization. 

Remember that your goal is to keep this number to less than 30 percent and ideally under 10 percent (for 30 percent of your credit score component). 

Making extra payments will also help you to pay off any balance you are carrying sooner and reduce significantly the amount of finance charges you are assessed. 

12. Dispute Any Credit Report Errors

Credit report errors are a fact of life. They can have an impact on your credit score needlessly. The answer is to frequently check your own credit reports for accuracy. If you see mistakes, go online to the credit reporting bureau website right away and file a dispute. It can take the bureaus up to a month to investigate and correct these errors, so do not put it off. 

The websites for this are:

13. Pay Down Revolving Balances to Less than 30 Percent

The credit scoring models are heavily concerned with how much of your available credit you utilize (counting for 30 percent). They want to see less than 30 percent used. If you have $5,000 in available credit, then this means keeping a balance of under $1,500 at the end of each month. You can pay down one or more of your balances even before the statement is issued to accomplish this. 

Ideally you should try to keep this credit utilization number to even less than 10 percent for maximum points in the category. 

14. Use an Eligibility Checker

When you are considering applying for new credit, you want to be careful to avoid too many hard inquiries on your credit reports. This is a component of your score that counts for 10 percent. The way to shop around without harming your credit score is to utilize an eligibility checker before applying. This way you will be able to reduce the number of creditors to whom you apply for credit. 

Tools like the eligibility calculator at: Money Savings Expert

This calculator will even give you a percentage chance of being approved for the cards you query about without needing to have any hard inquiries on your reports. They also help you to choose the cards that are best for your personal circumstances to narrow down the crowded credit card field.

15. Use a Co-Signer

If you are new to a credit history or trying to rebuild a damaged one, a simple way to get better loan and credit card approvals is by utilizing a co-signer. A family member or friend can help you with this if they have strong credit. You receive the benefit of having the loan or credit on your credit report by “borrowing” from their good credit. It will also help you to benefit from more advantageous terms and lower interest rates on the loan or credit. 

Credit Score Statistics and Facts - Where Do You Stand?

Credit scores come in a range of 300 to 850. In that vast range you find everyone in the country who has a credit score. Where are you standing with your FICO and VantageScore credit scores these days? We will look at these numbers in this chapter. 

Average FICO Score Statistics

The average FICO score for American consumers is 695 (as of April 2019). This is actually a good credit score. Poor scores are those below 550 with FICO. Nearly 12 percent of Americans possess a credit score that is 549 or lower per FICO. They are the sub prime borrowers. 

Looking at the other end of the range, some US citizen actually possess an over 800 FICO credit score. These fortunate individuals (with an 800 to 850 score) comprise over 20 percent of the population. These are the super prime borrowers. 

It is hard, although not impossible, to have a perfect 850 FICO credit score. This rarest of credit scores belongs to under one percent of the entire population. 

Average VantageScore Statistics

At this same time in 2019, the average American possessed a VantageScore of 673. Millenials (aged 22 to 35) boasted a VantageScore of only 634. The next category of adults aged from 35 to 51 were slightly higher on average with a Gen X VantageScore amounting to 655. Baby Boomers of the 52 to 70 year age group boasted an impressive average 700 VantageScore. The Silent Generation of seniors aged over 70 did the best, holding average VantageScores of 730.

Gender’s Impact Your Credit Score

In a word, yes your gender does impact your credit scores. The reason has nothing to do with secret discrimination though. The Board of Governors of the Federal Reserve conducted a survey analyzing over 10 years of data obtained from TransUnion and Mintel. 

They gathered data on over 4,000 single women and over 3,700 single men aged 21 to 40. Head Economist Geng Li who wrote the report discovered that women had lower credit scores on average than men. The average women’s VantageScore in the 21 to 30 age group was 762 versus the men of the same group’s 768. In the group of from 31 to 40, men boasted 793 to women’s 785. 

Though women boasted fewer credit inquiries and a longer credit history established, the women were also more likely to consistently carry larger amounts of debt leading to higher credit utilization ratios and to fall into late payments and delinquent accounts than the men in either age group. 

The two highest component categories of the scoring models hurt women more than men as a result and led to lower female credit scores in general. Yet it is worth nothing that the disparity was about one percent apart only. 

Overview of Credit Scores by Year, Age, Income, and State

It is good to know where you stand versus your peers in credit scores. I have gathered this information in this final section. Below I compare average credit scores based on year and age, income, and by state.

Average Credit Scores by Year and Age

By age, there is a surprising spread of credit scores. The following table shows the differences in averages:

by ValuePenguin

Average Credit Scores by Income

Credit scores by income varied significantly from the bottom earners to the top ones. The lowest income category with less than 50 percent of the median family income had a 664 score. Moderate income individuals with a from 51 percent to 79 percent of the MFI had 716, a significantly better credit score. 

The middle income group of from 80 percent to 119 percent of the MFI possessed a score of 753. Finally, the top earners with over 120 percent of the MFI counted on an average credit score of 775, per Lending Tree and Value Penguin’s data and graphs.

Average Credit Scores By State

By state, there was a somewhat surprising range of credit scores. This table below shows the distribution of scores per state:

Rank State ø Score ø Cards ø Balance
35 Alaska 668 2.9 $8,515
48 Alabama 654 2.69 $5,961
43 Arkansas 657 2.76 $5,660
34 Arizona 669 3.04 $6,389
24 California 680 3.23 $6,481
15 Colorado 688 3.13 $6,718
12 Connecticut 690 3.23 $7,258
33 District of Columbia 670 2.98 $6,963
31 Delaware 672 3.13 $6,366
35 Florida 668 3.19 $6,388
48 Georgia 654 2.97 $6,675
10 Hawaii 693 3.25 $6,981
8 Iowa 695 2.67 $5,155
23 Idaho 681 2.88 $5,817
21 Illinois 683 3.14 $6,410
37 Indiana 667 2.77 $5,581
24 Kansas 680 2.82 $6,082
39 Kentucky 663 2.78 $5,555
50 Louisiana 650 2.77 $6,074
5 Massachusetts 699 3.21 $6,327
31 Maryland 672 3.16 $7,043
13 Maine 689 2.91 $5,784
29 Michigan 677 2.91 $5,622
1 Minnesota 709 2.97 $5,911
30 Missouri 675 2.91 $5,897
51 Mississippi 647 2.57 $5,421
13 Montana 689 2.87 $5,845
38 North Carolina 666 2.95 $6,117
6 North Dakota 697 2.9 $5,511
8 Nebraska 695 2.83 $5,630
3 New Hampshire 701 3.1 $6,490
20 New Jersey 686 3.49 $7,151
41 New Mexico 659 2.79 $6,317
47 Nevada 655 3.18 $6,401
15 New York 688 3.34 $6,671
27 Ohio 678 3.02 $5,843
45 Oklahoma 656 2.71 $6,296
15 Oregon 688 2.95 $6,012
18 Pennsylvania 687 3.07 $6,146
18 Rhode Island 687 3.26 $6,375
43 South Carolina 657 2.9 $6,157
4 South Dakota 700 2.8 $5,692
40 Tennessee 662 2.77 $5,975
45 Texas 656 3.06 $6,902
21 Utah 683 2.95 $5,960
24 Virginia 680 3.08 $7,161
2 Vermont 702 2.86 $5,924
10 Washington 693 2.99 $6,592
7 Wisconsin 696 2.8 $5,363
42 West Virginia 658 2.76 $5,547
27 Wyoming 678 2.81 $6,245

Average Credit Scores of Home Buyers

The average homebuyer had a high credit score of 728. This was a little bit higher than the national average in general. Of more than 85,000 applicants for mortgages which the Federal Reserve surveyed, only 6.8 percent possessed a score under 620. 

The U.S. Federal Reserve Bank published a credit report on home buyers in 2010. The data considered minority groups versus whites as well. Every group surveyed except for African American consumers possessed credit score averages higher than 700. 

Asian borrowers were the most fortunate, with an average high of 745 in FICO credit scores. Non-hispanic white had 734 average scores. Hispanics had 701 scores on average.

8 Practical Tips for Avoiding Declines in Your Credit Score

Besides these 10 negative credit impacting actions we have just gone through in some detail, there are some additional tips for avoiding hurting your personal credit score. These other eight practical ideas for maintaining your credit score include the following:

Never Ignore Possible Inaccuracies

Mistakes on credit reports happen all the time. Even if they are limited to only one percent of credit reports, this still amounts to over a million reports with potentially damaging misinformation. You can check your credit report for free (with no negative consequences) through a service like Credit Karma or Discover It or by contacting the three major reporting credit bureaus online (they will send you all three of your reports once per year at no charge) or by phone. 

If you spot a mistake, no matter how small, make sure to file a dispute at your earliest convenience with the relevant credit reporting agency. It can take them up to a month to investigate and correct the error.

Paying Your Insurance Monthly

How you pay your car insurance premium does not directly impact your credit score. The way it can affect you is if you only pay it by the month (instead of quarterly or semi-annually). In monthly payment instances, the insurance provider will conduct a hard inquiry on your credit report since they are de facto extending you credit. 

Each of these hard hits on your credit report has the potential to lower your score by several points, in particular if there are several of them at the same time. Avoid this by paying your car insurance premiums for a longer time period than only a month.

Transferring all of Your Credit Card Balances to a Single Card

This action may allow you to consolidate your debt and pay less interest, but it can cost you points in the credit utilization category (making up 30 percent of your total credit score). The reason is that the credit scoring algorithms check your balance on each card to determine per card credit utilization. 

Anything over 30 percent utilization looks bad and costs you points, even if your average credit utilization is less than 30 percent. 

Avoid Too Many Credit Requests

The component for new credit is 10 percent of your score. With each additional request for credit, this number of hard inquiries goes up. Several of them at once will cost you points in this category. Instead, make it a point to spread out your requests for new credit by several months if at all possible.

Withdrawing Cash on Credit Cards

The simple act of withdrawing a cash advance from your credit cards will not directly affect your personal credit score. The high costs surrounding these cash withdrawals will increase your monthly payment minimums. 

If you become unable to keep up with the minimum payments in a timely manner, then this will badly impact your payment history component (counting for 35 percent of your score). 

Your cash advance will also raise your credit utilization ratio. 

If this drives the key number up above 30 percent, then you will lose points from the critical 30 percent component of credit utilization. Cash advances from credit cards may not appear as individual items on your report, but going over the key threshold in utilization will undoubtedly hurt your score every time.

Co-signing on Credit Applications

It does not directly hurt your credit score to be a co-signer on someone else’s loan. The way it can badly hurt you is if they do not meet the terms of their agreement by making on time payments. Even though this is their loan, your score will suffer in the payment history critical component (35 percent of score) if your co-signer falls behind or becomes delinquent on the loan. 

The debt amount will also drive up your debt to income ratio, which lenders do consider in the approval process. 

Beware of the Trap of Closing Too Many Credit Lines at a Time

It is tempting to close out credit cards that you simply do not use. The problem is that your credit score includes a 15 percent component for average age of accounts. With each account closed, you lower your credit’s average age. This can cost you more points the more accounts you close at the same time. You should carefully consider closing existing accounts and spread them out if you do decide to go through with this.

Closing cards with 0 percent credit utilization can also harm your average credit utilization component of your score by driving it higher (a category that makes up 30 percent of your total score).

Closing Cards With Remaining Balances

Cancelling a card with a remaining balance will cause you to increase that card’s credit utilization to over 100 percent (as the available credit will be $0 then). This would harm you in the crucial component of credit scores called credit utilization (making up 30 percent of your score). 

A better way to do this would be to first pay off or transfer the balance (from the card you will close) to another card. Then the card will show a 0 percent utilization when you close it.

Be careful about closing cards that you had for a long time as this will negatively impact your overall credit history length (the component making up 15 percent of your credit score).

The Top 10 Negative Influencers of Your Credit Score

1. Collections Accounts

Collections occur when you have a debt that you have not paid in a timely manner. When you fall substantially behind in delinquency on a bill like a credit card or medical bill, the original creditor will usually write off the debt as a total loss. They then sell it out to a collection agency. It is then entirely up to the collection agency to try to get the money that you owe back.

Not every lender or creditor has the same policy on this action. A great number of credit cards send out the 180 day delinquent accounts to collectors. At this point, either they or the collection agency will report your account as “in collections” to the major three credit bureaus. This will cause you to have a “collection” notation on your credit reports. The original creditor may or may not alert you to the fact that they are sending your account out to collections. 

Once you suffer an in collection account on your credit report, you can anticipate your credit score plunging. The number of points such a collection account will impact your score depends on how high your credit score proves to be when it becomes reported as a collection account. 

A correspondingly higher credit score will lose more points in general. 

The amount of the account in collection will also determine how big an impact this status has on your credit score. If your original debt amount was under $100, the collection account may appear on your credit reports but not much harm your score (or even hurt it at all with Vantage Scoring’s model for under $250 collections accounts). 

Some of the credit scoring models distinguish between the various kinds of debt, like non medical or medical, while others will discard penalties for collections accounts that you have paid off.

2. Foreclosures and Short Sales

Foreclosures and short sales have to do with mortgages on which you fall behind. The bank has the right to foreclose on your property if you become seriously delinquent. You could also arrange a short sale with the bank to repay part of the loan and settle it. Both of these impact your credit score in several meaningful ways. 

Yet short sales done properly will create a less negative effect on your personal credit score than an all out foreclosure will. 

Foreclosures can have a devastating impact on your credit score. For starters, it will stay on your credit report for a full 10 years, though the impact will be gradually less as it gets older. 

The late payments that led to the foreclosure cause a significant negative effect on your credit score. According to FICO, foreclosures will cause an estimated drop of from 175 to 300 points in your score.

Short sales have a considerably smaller impact on your score. This is a more difficult procedure as it requires approval from the mortgage lender who is involved. You will have to give the lender an application detailed with information on your financials. 

If you can arrange a short sale with your lender without missing any mortgage payments, it will reduce the negative impact on your credit score. 

Also, you should negotiate so that your lender reports to the credit bureaus that your short sale was paid in full. It will make a considerable difference in the way it is interpreted from your credit report.

If you can not get a fast approval of such a short sale from your lender, you may be forced into missing payments on your mortgage. This would cause your score more harm as timely payment history amounts to 35 percent of your FICO credit scoring component. The lender could also determine that you do not meet their qualifications for a short sale, which would then leave you with either finding a way to hold onto the house or letting it fall into foreclosure eventually. 

3. Bill Payment History of Late Payments

There is no larger single element that impacts your credit score than timely payments (amounting to 35 percent of your credit scoring model). This means that missing a payment and having it marked as late to the credit reporting bureaus will hurt, sometimes quite a lot. 

A late payment that is reported as 30 days or more past due could crash your credit score by up to 100 points. If your credit is without blemish, it might cause this amount of a drop. When your score is already lower, it will not affect it as much, but it will still damage it.

4. Increased Debt to Credit Ratio

The total debt that you possess remains the second largest factor in determining your personal credit score. As a 30 percent component of your credit score, you can not afford to abuse this ratio. Credit scoring models look at this credit utilization (the ratio of your credit card balance to your total credit limit) on every one of your cards as well as your total credit utilization for all accounts. 

The higher these balances are compared to your credit limits, the more damage this does to your personal score. 

The worst possible thing you can show in this category is over limit or maxed out card balances (amounting to 100 percent or higher utilization).

Remember that credit scores also consider the proximity of your loan balances to original loan amounts. This is why paying down loan balances will help your credit score. 

The opposite is true too. If you carry large amounts of debt (in particular credit card debt), this will harm your credit score and be damaging in your efforts to get new loans and credit card approvals (or to increase your credit limits). 

Your debt to income ratio might be low, but if your credit utilization ratio is high, this will negatively impact your total score. It could subsequently cause you to be denied obtaining credit.  The credit scoring models want to see no higher than 30 percent debt to credit ratio and prefer 10 percent in an ideal world.

5. Repossessions

Repossession occurs if you miss multiple loan payments that cause you to default on your car loan. The statutes in most states today permit your creditor to assume possession of the car (from a delinquent auto loan) whenever it is convenient for them. Repossession is an especially bad mark on a credit report as it remains for up to seven years and can cause you a 100 point credit score drop. 

Repossessions harm your credit in three meaningful ways.

This starts with late payments. These cause negative effects on your credit report for up to seven years by themselves. Once your car has been repossessed, the three main credit bureaus will likely include notations that your car has been repossessed for up to seven long years. 

Collections efforts to recover money you still owe on the loan after they repossess and sell your vehicle will also show on your report for as long as seven years. This is the case even if you pay off the debt later.

The best way to avoid going through the damage of repossession is to stay in contact with your lender once you fall behind on payments. You may be able to arrange an easier and longer repayment schedule if you have suffered from financial hardship or natural disaster. 

6. Negative Narratives

According to Vantage Score, negative narratives are notations on your credit report that are derogatory. These cause the most harm and will keep your score from rising for longer time frames. Lenders consider such derogatory entries to be proof of debt that you mismanaged. It explains why the various credit scoring models count them as sufficient reason to allow significant and lasting reductions to your credit score. 

You should avoid all of these 12 derogatory remarks if at all possible:

Foreclosure process started, foreclosure completed, Forfeiture of Deed in Lieu of Foreclosure, Redeemed Repossession, Repossession, Voluntary Repossession, Paid Charge Off, Account Charge Off, Account Included in Bankruptcy, Settlement Accepted on Account, Account Currently 30 (60, 90, or 180 days) past due, and Account assigned to external or internal collections agency.

7. Third-Party Collections

As one of your accounts reaches the seriously delinquent point, the creditor may cut their losses by selling off the account to a third party collection agency. This could happen after they have made numerous attempts through their own internal collections department. After they have sold off your account to the third party, this in collection account can get reported on your credit report as a separate delinquent account. 

This is part of the way that they create substantial negative effects on your credit scores. 

Third party collections only appear on accounts that are unsecured (like personal loans or credit cards). Mortgages, car loans, and other secured loans show up as foreclosures or repossessions on your report. Repossessed car loans can also be sent out for third party collection. If your car is repossessed then sold at a steep discount at auction, then the recovered amount could be lower than your remaining balance, which would then be sent out for collections. 

There are only two ways to have collections taken off of your credit report.

If the information reported is valid, it takes a full seven years from the first delinquency date for the information to drop off of your three reports. This delinquency date is the point from which your account first went delinquent (and you never again made it current). 

If the information on collections is not accurate, you can always file disputes with the credit reporting bureau. This would result in the record either being removed or updated if the credit bureau rules that the dispute in your favor. 

8. The Age of Your Credit History

The age of your credit history could be a positive or a negative influencer of your credit. Lenders consider this length of time to ascertain the chances of your repaying your loan or credit in a timely fashion. With a longer history, this demonstrates to them that you possess more experience utilizing and managing credit successfully. 

The theory goes that the longer amount of credit history you have, the more certain lenders are able to be in deciding the quantity of risk they are assuming in lending you money. 

Opening or even closing an account can lower your credit score over the short term. 

This is because it will reduce the average age of your credit accounts. If you close an existing credit account that has a longer credit history, this will likely cause a negative impact to your scores. This impact becomes more pronounced should you decide to close out a number of older accounts at a single time, per Vantage Score. 

Opening new accounts waters down your length of credit history and can similarly cost you points, particularly if you open several new accounts in close proximity to one another. 

9. Payday Loans

In general, Payday Loans do not negatively impact your credit score so long as you pay them back fully and in a timely manner. There could be an exception. Some lenders may regard Payday Loans as negative since they feel that customers of these loans are not as reliable a borrower as others. In such cases, having a Payday Loan on your personal credit history could harm your chances of getting approved for some loans. 

It is important to keep in mind that you have more than a single credit score. The two major models of FICO and Vantage Score, as well as the three main credit reporting bureaus of Experian, Equifax, and TransUnion, all calculate scores differently using their own proprietary criteria. 

The result is that Payday Loans can impact your various scores differently. Some lenders also do not distinguish between traditional loans and Payday Loans. 

10. Unemployment

The personal information section of your credit report may list past or current employers. This is not promised to be a complete employment history or picture. Instead it is an employer list that was included in your past applications for credit that then reached the three main credit reporting bureaus (from your lenders). 

This information is only obtained when you apply for a loan or credit, and not all lenders even report it. This explains why any employer list is not likely to be comprehensive. There are likely to be gaps shown in such an employment list (which depends on the last time you applied for credit). 

The good news is that this will not create any impact on your credit history or score. 

In fact, unemployment will never directly impact your credit scores. The reason is that your credit reports are not set up to prove if you are employed. Instead, they share information related to debt and credit. There could be an indirect effect of being unemployed revealed on your report if you can not make your timely monthly full debt payments because you are unemployed.