What Affects your Credit Score?

Most of us are very much aware of the importance of credit score. However, we have a very little idea about how it gets affected. If you are also in the same group then you must broaden your knowledge about this financial loop. It is expected that you know on what your credit score depends. Basically, your credit score depends on how to shell out your debits. But that is not all. Apart from these, number of facts are there based on which your credit score gets computed.

Let us have a look at the factors that affect your credit score.

1. Payment account:

Payment structure plays one of the decisive factors that affect your credit score.  About 35% of your credit score depends on your payment history. All payments made by you are taken into account and in addition to this, undesirable public data like bankruptcy, taxes are also considered in this process. Other than these, the factors that affect your credit score are the following:

• Number of offending account,
• Amount of “paid as agreed” accounts,
• Urgency of offending payments and
• Strictness of offending payments

2. Duration of credit account:

Your credit history is greatly affected by the duration of your credit. If you are holding credit for a long time and have a good history of paying the credit on time then you are in a higher rank than that person using new credit.

3. Kind of credit you are using:

What kind of credit you are using is also a big factor that affects your credit score. Basically, the lenders pay more attention to the variety of credit holder having good credit scores. It makes your image impressive to the lenders and they feel you trust worthy and eligible if you can show that you are a good manager of credit and can handle a range of types of credits.

4. Come to an investigation of your credit:

This is another most important aspect that decides your credit score. In this case, the lenders look over the fact what kinds of credits you have unwrapped or applied for at the most recent time. A new store card or credit card, application for mortgage or any type of loan and other factors are taken into account. However, a distinct investigation will not harm you but several investigations in a short duration of time may point to the fact that you have failed to pay some of your debit or got distressed.

5. Amount to be paid versus amount of credit:

How much credit you are supposed to pay is one of the most important factors that affect the computation of your credit score. It has been found that many people have the misconception that longer you use the credits better is your credit score but this actually one side of the coin. For a good credit record, you must clear your credits all in time and this is what makes your credit record clean. Extreme usage of credit is a drawback and you are often considered unable to pay your credit on time.

The author writes for online personal loans  which provides information Perth Personal Loans

 

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Category: Credit Score