Finance

Factors That Can Affect Your Credit Score

Credit score is a three digit numerical figure that is used to assess the credibility of a person. When a company extends a credit to a person, it wants to take it back along with the interest. So, a company will definitely want to know whether you can return its money or not. This thing is evaluated using the credit score maintained by the credit rating agencies. There are many factors that can affect your credit score and you should have proper knowledge about them to keep a close eye on them. You can take help from finance and credit card news to understand it properly. It is necessary for you as this score will determine whether or not you are going to qualify for the loan, and if yes, then on what terms and conditions.

Credit Score

Late payments disturb your credit score:

The most important thing is the timely payments you make to your lenders. Your credit rating is affected by the percentage of your late payments. If there are more late payments, it will depict that your prospective lender may face the same problem from your side in the future. So, it will negatively impact your credit score. How you can prevent it is by making timely payments every month in full. If you face problem in remembering the payments when they come due, you can set reminders for the purpose. You can also consolidate different credit cards into one so that you do not have to face the problem of managing payments of multiple cards.

Types and the number of loans you can get:

The quantity and the types of loaning accounts you possess is another important factor that is considered in your credit reports. Having diversity in the loans means there are many lenders who are willing to extend credit to you. Similarly, an increased number of loans depicts you can avail and manage many loans. But do not apply for loans just to enhance the number; managing many accounts may become difficult at times.

Age of open accounts:

The average age of your open credit cards, auto loans, mortgages and other type of lending are also taken into account in your credit report. If you have managed these old loans efficiently, it will definitely impart a positive effect on your credit score.

Derogatory marks:

All the negative things in your credit report add to the derogatory marks. These may include bankruptcies you have faced, lien, foreclosures and things like that. Derogatory marks take almost seven years to get removed from your credit history and may affect severely your credit score. If that mark is incorrect, you can ask to remove it. But if the derogatory mark is genuine, you cannot do much about it and you have to wait for the time to remove it from your report.

All these factors have different weights in compiling your credit score but all of them work together to determine your score. You can always take assistance from finance and credit card news to improve your credit score.