5 Important Factors that Influence Your Credit Score

At times your Credit Score is lower than you expect and that may impact your loan application plans. In spite of putting in all your effort, unknowingly you keep repeating the same set of mistakes that influence your credit score negatively. Credit score is basically a statistical three digit number that ranges from 300-850. Higher the credit score more favorable are the chances of getting approval on loan application, while lower credit score rejects your loan application. Customers, should therefore, be careful with their credit score.

These credit reports are then used by banks, insurance companies and non-banking financial organizations to approve your loan application. Credit Score is a financial report that basically shows your credit worthiness that is used by the lenders to check whether you will repay the borrowed amount or will do any defaults.

Given below are the 5 vital steps that can edge up your credit score and reflect a good credit history on the credit report.

1. Length of a Credit History: Have you been managing your credit score well? If yes, then you have definitely increased the chances of getting a loan approved. A longer credit history with a healthy credit score ensures you to have approval on loan application. If you have a good credit history for a long period of time, it is sure to have approval on the loan amount. So, never close your credit card that you are using for a long period of time and has good credit score as it increases the chances of a loan getting approved.
2. Payment History: Being disciplined is always advantageous. Payment history largely influences your credit score calculation. A good payment history proves that you are particular about the timely payment and proves you creditworthy in front of lenders. In contrary, delay in credit card payments affects your credit score drastically.
3. Debt Amount: Inching close to your credit limit can negatively influence your credit score. So, refrain from using all the available credit once you touch 30 percent of your limit. Keeping your debt low projects that you clear all your dues on-time and are able to afford the credit card bills.
4. New Credit: Just when you plan to apply for a credit card or loan, restrict from making too many enquires. Frequent enquires in multiple bank shows lenders that you are credit hungry and want to opt for more credit. However, you can check your credit score anytime, and it doesn’t affect your credit history.
5. Mix of Credit: A healthy mix of credit covers home loans, car loans, and insurance and credit card bills. If you are able to pay all the debts on time, lenders assume that you are credit worthy and will surely not do any defaults. This increases your chances of getting approvals on the loan amount. In case, if you have one type of credit history like for example home loan or credit card, then it doesn’t enhance your credit score at all.

A good balance of all the factors improves the credit score. Customers can either avail free credit score or else pay subscription amount to get a detailed report.