Almost every person fears to have bad credit. However, not all of them know what’s considered bad credit. Well, for those who don’t know the definition of bad credit differs on what credit scoring system you have.  

To make things simple, a low credit score means that a person represents a higher risk to lenders since they’re considered to have a higher chance of defaulting on a loan. 

On the other hand, an excellent credit score shows creditors that they could be quite self-assured that a client will repay loans since they’ve shown responsible behavior when it comes to credit in the previous years.  

Before you search for the best credit repair programs, you should know a couple of things that can affect your credit score. Here are some of them: 

New Credit 

The new credit aspect of your score considers the number of new accounts in your credit file as well as the hard inquiries on the credit report. It could have a bad impact on the credit score if you’ve got a lot of inquiries and/or newly opened accounts on your credit report. The reason for this is that it appears like you’re attempting to get a lot of credit and might not have the ability or the intention to pay all of it in the future.  

But, this aspect also signifies 10% of your credit score only. Thus, it’s almost certain that it won’t be the reason why you’ve got a bad credit score if you’ve got a lot of new accounts or inquiries.  

Credit Mix 

The best mix of credit needs having a balance of both installment and revolving accounts. Lines of credit and credit cards are a couple of examples of revolving accounts. Installment accounts include home loans, student loans, car loans, and other loans that you pay in installments.  

In general, having too few accounts or too few accounts of either type can contribute to bad credit. However, it isn’t likely to be the main driver of bad credit since it only contributes 10% of the credit score.  

Length of Credit History 

The age of your credit is associated with a lower risk of defaulting on your loans. It can hurt your credit score if you do not have enough credit age.  

Credit Use 

This refers to how much revolving loan you’ve got compared to the amount of available credit you’ve got. To make things simple, are your credit cards all maxed out? Do they have 0 balances? Are they somewhere in between? It can impact your score negatively if you’ve got higher balances because it means that you might be close to being financially overextended.  

Payment History 

This category looks at how frequently you pay your loan on time compared to how often you’re late in paying the bills. The longer your bills go without being paid and the more payments you miss, the lower your credit score will be. This will greatly affect your score since it contributes 35% of your credit score.