By Michael Boyce

What do you know about your credit score and how it relates to your credit health? Your credit score is a three-digit number that dictates much of your financial fate, and the reasons it rises and falls aren’t always clear. It can factor into whether or not you are approved for certain purchases and could affect financing and other opportunities. While everyone has one, not all of us fully grasp the importance of our credit scores. Even if you check yours regularly, you may not have been aware of these eight surprising things about your credit score.

1. You have more than one number.

Your credit score might seem like one monolithic number, but in fact, there are several different agencies that generate these numbers, each with their own methodology. It might help to check more than one source when checking your score, since your potential creditors are probably doing the same. Each score is created differently, so look into what your particular score is comprised of to get the full picture.

Husband and wife reviewing their credit reports

2. Your debt-to-income ratio matters.

It’s important to keep track of your debt-to-income ratio. This measure divides the total of all your monthly debt payments by gross monthly income. A balanced debt-to-income ratio (DTI) usually means strong credit health. A high DTI, such as 50 percent or more, may signal to lenders that an individual might have trouble making payments.

3. Keep an eye on all the factors in your score.

Staying on top of your score is paramount to keeping it healthy, and there’s more than one way to do just that. Be proactive about checking your credit score. And don’t just look at the score — it’s important to look through your full credit report to ensure your score appears correctly, and if not, then investigate why that might be. Did you not realize you’d missed some payments? Or could there have been fraudulent charges on your accounts that need addressing? If there are issues, then correct the record where needed.

If you have debts you can’t keep up with, consider consolidating them into a single personal loan. This could not only allow you to pay off higher-rate debts with a lower-rate loan, but also potentially pay them off more quickly. It could also give you the opportunity to demonstrate how you can make payments on time.

It’s also a good idea to ensure you aren’t carrying too much revolving debt; this usually comes from not paying off your bills in full each month. Some people who would like to take better control of their debt use a debt consolidation personal loan to simplify debts into one. more manageable monthly payment. Personal loans typically have fixed rates. If the rate is lower than that on your current debt, you can save money on interest as well as decrease the time it could take to pay off the debts if you continued paying the minimum on your bills.

There are several places to check your score. You can get a free copy of your entire credit report from all three credit reporting agencies at once per year. To get your credit score from this service, you’ll have to pay an additional fee.

Credit score displaying on mobile device

4. Your credit score could include factors outside of finances.

There are some surprising things that could affect your credit score, like your overdue library books or parking tickets. Depending on where you live, libraries may turn to collection agencies to gather outstanding fines or municipalities may look to recoup parking tickets that way. These inquiries don’t always affect credit health, but better to be on the safe side. In other words, it’s probably a good idea to stay on top of all your debts, and not assume that some obligations are less important than others..

Man writing in notebook on desk next to laptop.

5. There’s strength in debt diversity.

Having a mix of borrowing sources could be helpful to achieving your financial goals. How you manage a credit mix that includes revolving loans, like a credit card, and installment loans, like a personal loan or a mortgage, helps creditors assess your creditworthiness. Paying these bills on time regularly demonstrates your commitment and ability to stay on top of your finances.

Man on floor rug looking at bills and laptop

6. Having debt is okay, as long as you manage it wisely.

Don’t fear debt. Did you know that a small credit balance can actually be a good sign that you can handle credit responsibly? If you’ve got no debt at all, that may signal a credit naiveté. A strong history of making monthly payments, on the other hand, may demonstrate that you can navigate your finances and be trusted by creditors.

Credit Card Application

7. Longevity matters.

The age of your accounts, including a consistent pattern of on-time payments, can be a sign of credit health. For example, when you take out your first credit line, you’ll start building credit but won’t immediately have a score. Those people who make building credit a long-term goal and have held credit for a while, typically have great credit health. It takes time to build a reputation, and your credit is no exception.

realtor handing keys to husband and wife

8. Be nice to your landlord.

Consistent late rent payments can indeed affect your credit score. When you miss payments, businesses can report you to the credit bureaus and the same holds true for your landlord or management company. Make sure you keep up with your rent, and if disaster hits unexpectedly, letting your landlord know about your situation may go a long way in keeping the relationship you have with him or her (and your credit) healthy.

In the end, the best defense against poor credit health can be getting all the facts you need so you understand your score and can work on it, if need be. And most importantly, check and monitor your credit on a regular basis so nothing on your report comes as a surprise.

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*FICO® Credit score Terms:

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