If you apply for finance a lot, each of those applications will appear on your credit history, and they can impact your credit score for the negative. This is likely to be worse if you already have a poor credit rating.

What financial decisions do credit scores impact?

A credit score is a number that lenders use to determine the risk of loaning money to a given borrower. Credit card companies, auto dealers, and mortgage bankers are three types of lenders that will check your credit score before deciding how much they are willing to loan you and at what interest rate.

How does your credit score affect your financial future?

If you have high outstanding balances or are nearly “maxed out” on your credit cards, your credit score will be negatively affected. A good rule of thumb is not to exceed 30% of the credit limit on a credit card. Paying down an installment loan is looked upon with favor.

How does a mix of credit affect your credit score?

While there are many different credit scoring models, they generally factor in the mix of different types of credit you have, such as credit cards, installment loans, mortgages, and store accounts. If you have too many different credit accounts – or don’t have a mix of different types — it could negatively impact credit scores.

How does opening a new credit account affect your credit score?

Opening many credit accounts in a short amount of time can be riskier, especially for people who do not have a long-established credit history. Each time you apply for a new line of credit, that application counts as an inquiry or a “hard” hit. When you rate shop for a mortgage or a car loan, there may be multiple inquiries.

How does a foreclosure affect your credit score?

Having this type of information on your credit history may negatively impact credit scores. If you have gone through financial hardship, and had to file for bankruptcy or completed a foreclosure, credit scores may reflect this negative information for several years. What are some other factors that might negatively affect credit scores?