5 Factors That Impact Your Credit Score


When you apply for a business loan, money lenders need to check whether you are eligible for the loan or not. Your credit score is a number that lenders check to determine your eligibility. It helps them understand your financial condition by showing various elements of your credit history. This is one of the easiest ways for lenders to decide who they are going to lend money to. If you are found to be a defaulter and have a bad credit score, it will significantly affect your chances of getting a business loan. You need to calculate the impact of credit score on loans to understand the importance of it. In this blog, we will discuss the factors that impact your credit score so you can start working on them.

Amount Owed

Your credit utilization ratio plays an important role in determining your credit score. It measures the amount of debt you have as compared to your credit limit. It also checks how much of your available credit limit you have used. If you have a high credit utilization ratio, the lenders are most likely to reject your request, which means you might not be able to manage your debt effectively. Your balance on a credit card is also checked; for example, someone who owes $80 on a credit card with a limit of $1000 will seem more responsible to the lender as compared to someone who owes $700 on a credit card with a limit of $10,000.

Payment History

This is the most important factor that can both make and break your loan application. This tells the lender whether you are responsible for payments or not. If your payment history shows that you are a defaulter and have missed several deadlines, it will impact badly on your application. Lenders check the following things in your payment history.


  • Have you paid your bills and debts on time in the past?
  • If you were late, how late were you? The later you are, the worse it gets for you.
  • Do you have any bankruptcies, debt settlements, public judgments, etc., against you?
  • The last time you missed a deadline for payment, a person who missed credit card payments several years ago is more likely to be trusted.

New Credit

Lenders also check how many new accounts you have recently opened. You might wonder what new accounts have to do with your credit score; however, there’s a significant impact on them. When you apply for a new line of credit, lenders make a hard inquiry which means that they check your credit stacking information during the underwriting process. This can cause a slight decline in your credit score because if a person has recently opened several new accounts, it implies that they have an unstable cash flow, and the accounts are probably opened so they can take on more debt. No money lender would want to lend loans to someone who’s already in too much debt; hence, it is important not to open too many accounts before applying for a loan.

Length of Credit History

Your long credit history can also help you get a business loan. Creditors like to see how long you have been using credit and how long your account is; however, it doesn’t have that much of an impact. A long history might have more chances of getting a loan, but the history should also be good. A person with a short but good history has a better chance of getting a loan as compared to someone who has a long history and a list of debts on their account. So even if you don’t have a long history, make sure it’s a good one.

Types of Credit

Lenders also check how many types of credit you use, including credit cards, mortgages, installment loans, and store accounts. It might help your application if you have a good mix of credit, but if you don’t have it, don’t go opening new accounts to get it. This is a small factor and doesn’t have that much of an impact on your credit score.

What isn’t Considered in Your Credit Score Check?

The following are the things that are not considered when the lender checks your credit score.


  • Your residence
  • Marital status
  • Age
  • Race, color, religion, nationality
  • Occupation and employment history
  • Family support obligations
  • Salary
  • Any information not found in your credit report


If you want to maintain a good credit score, you must take these factors into consideration and calculate the impact of credit score on loans.Some of them might have a bigger impact on your credit report as compared to the others, but all of them play significant roles in making your credit score worth trusting. Make sure you choose the right lender to get a business loan. 0perlends their clients business loans with a 0% interest rate to help them gain financial freedom.


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