Understand Factors of Your Credit Score
We are all aware of how important credit scores are.
It is our ticket to having our credits approved whether it is a card, mortgage or car loan.
It represents the risk a lender will embark in if he lends us a certain amount.
Our score will also help determine the terms of our loan and the amount we can borrow.
However, what are the factors that affect it? How can we make sure that our credit score looks good? Your credit scores depend on various factors.
All these are recorded in different credit bureaus.
There are three widely recognized bureaus in the country.
Your scores depend on what the creditors submit.
Every time they submit information about your credit, it affects your credit scores.
As mentioned earlier, there are various factors affecting your credit score.
Some of them are identified below.
Note that the computations of the different bureaus are different.
However, they consider similar factors: 1.
Your payment history is an important factor in determining your credit score.
If you are current with all your payments, expect that your score will be higher.
The opposite happens if you are late with your payments.
Your score is greatly affected by the obligations that you were unable to pay as well.
If you missed a payment, it will be checked how long ago it was.
The number of times you missed payments will also be accounted for as well as the amount involved.
2.
Your current debt is also an important factor.
Remember, lenders want to know your ability to pay.
Even if you have been current with all your payments, your ability to settle a new debt will still be measured.
If you want to improve your score, pay your current loans before applying for a new one.
3.
The length of having credit is also a consideration.
Information is essential in determining your credit score.
If you only have credit for such a short time, there will be no enough information to base your scores.
In most cases, more points are given to those who have credits for a longer time.
4.
You current state is also important for lenders.
This is why your stability matters.
The measure of stability is usually based on your work.
How long have you been with the organization? How stable is the organization? Aside from work related information, your home address can also be a factor.
If you have been living in that same address for more than three years, you are pretty stable in the eyes of the lenders.
5.
The current type of credits you have is also a considerable factor.
There are basically two types of credit.
One is installment and the other is revolving.
An example of installment credit is the mortgage loan, for revolving credit, we have credit cards.
Those who have a blend of these types of credit are given more points as this represents the trust lenders are giving them Knowing the factors affecting your credit score will help you improve them.
Check these factors and find a way to improve them.
It is our ticket to having our credits approved whether it is a card, mortgage or car loan.
It represents the risk a lender will embark in if he lends us a certain amount.
Our score will also help determine the terms of our loan and the amount we can borrow.
However, what are the factors that affect it? How can we make sure that our credit score looks good? Your credit scores depend on various factors.
All these are recorded in different credit bureaus.
There are three widely recognized bureaus in the country.
Your scores depend on what the creditors submit.
Every time they submit information about your credit, it affects your credit scores.
As mentioned earlier, there are various factors affecting your credit score.
Some of them are identified below.
Note that the computations of the different bureaus are different.
However, they consider similar factors: 1.
Your payment history is an important factor in determining your credit score.
If you are current with all your payments, expect that your score will be higher.
The opposite happens if you are late with your payments.
Your score is greatly affected by the obligations that you were unable to pay as well.
If you missed a payment, it will be checked how long ago it was.
The number of times you missed payments will also be accounted for as well as the amount involved.
2.
Your current debt is also an important factor.
Remember, lenders want to know your ability to pay.
Even if you have been current with all your payments, your ability to settle a new debt will still be measured.
If you want to improve your score, pay your current loans before applying for a new one.
3.
The length of having credit is also a consideration.
Information is essential in determining your credit score.
If you only have credit for such a short time, there will be no enough information to base your scores.
In most cases, more points are given to those who have credits for a longer time.
4.
You current state is also important for lenders.
This is why your stability matters.
The measure of stability is usually based on your work.
How long have you been with the organization? How stable is the organization? Aside from work related information, your home address can also be a factor.
If you have been living in that same address for more than three years, you are pretty stable in the eyes of the lenders.
5.
The current type of credits you have is also a considerable factor.
There are basically two types of credit.
One is installment and the other is revolving.
An example of installment credit is the mortgage loan, for revolving credit, we have credit cards.
Those who have a blend of these types of credit are given more points as this represents the trust lenders are giving them Knowing the factors affecting your credit score will help you improve them.
Check these factors and find a way to improve them.