As you already know, your credit score is an extremely important three digit number. It sets the stage on whether you will get approved for a loan, and the interest rate you’ll pay on a new home loan, refinance or credit card.
Here’s a closer look at what influences your credit score
Payment History – The most influential category when it comes to your credit score. Your payment history is a record of your payments over time. Lenders and creditors look to this as a sign on whether you will make late payments or miss them altogether.
Age & Type of Credit – Each account on your credit report has a “date opened” field. This is the age of your account or how long it has been open. As for type of credit, the different kinds of credit you have impact your report and score. For example, credit card, mortgage, and auto loans.
% of Credit Limit Used – This is otherwise known as utilization and it evaluates the overall usage of your available credit. Experts suggest keeping your utilization under 30% on each of your accounts.
Total Balances/Debt – This is the total amount of money you owe to each of your lenders.
Recent Credit Behavior – Opening new accounts and the credit inquiries for a mortgage or credit card, all fall under this category.
Available Credit – Your available credit is the amount of credit that’s available to you at any given time. It’s also tied to your percentage of credit limit used, or utilization
For Example my credit score is 715 due to following reasons:
1.) The balances on your accounts are too high compared to loan amounts
2.) Open real estate account balances are too high compared to their loan amounts
As for reasons 1 and 2, I bought a brand new house and a whole lot of brand new furniture to fill it a few months ago. I expected my credit score to take a hit and my expectations were right on par. Now, I need to pay down my mortgage and my furniture debt, on time, every time each month. It’s going to take some time (especially on my mortgage), but every responsible payment helps. At times, I’ve also made an extra payment or two on my furniture when I can.
3.) The date you opened your oldest account is too recent
My oldest open account is my student loan account. As my oldest open account, it sets the length of my overall credit history and you can’t change history. I have to be patient and my score will benefit as my account ages.
4.) Available credit on your open bankcard or revolving account is too low
My available credit limit is too low because of the big furniture purchases I mentioned in 1 and 2 this reason code highlights the fact that carrying higher balances can affect multiple categories. But, as I work hard to pay down those balances, that one action will have a positive affect across the board.
If you’re looking to improve your credit book your appointment at www.cibilconsultants.com click now !
Source Secondary
No comments:
Post a Comment