Now that you have a better idea of what a credit score really is, we can start looking at all the factors that come into play in determining your score. In total, five main factors affect your credit score:
One of the most important factors in your credit score is the history of your payments, both for your credit cards and for other credit products. Always be sure to make your payments on time and not to miss or be late for a lot. Some changes here and there are not likely to make a massive change, but if the delay in payments or delay becomes a habit, your credit score will certainly suffer.
Debt / Use
This is to compare the amount of your debt to the amount of credit you have. If you constantly have a large balance or maximize your cards, your credit score will be quite low. They want to know that you can use credit appropriately.
Credit history / duration
The longer a credit card or other account has been opened, the better your credit score. Credit accounts that are new or have not been open for a long time are not as good for your credit as they have been for years. That’s why it’s important to think about which card to keep if you want to cancel it. It is always better to keep the older ones and cancel the new ones.
Whenever a lender or creditor pulls your credit score to review it, it takes a little bit of a kick. So, if you apply for multiple credits at the same time, your score may drop a bit. Again, this one is pretty simple and if you want your score to remain high, be careful how often you apply for a new credit over a short period.
Diversity of your credit
The more different types of open and used credit accounts are, the better your credit score. This shows that you are responsible and can manage credits of all kinds from different sources. Of course, if you have a lot, make sure you pay for it and use it responsibly.
As mentioned earlier, the higher a credit score and higher, the better. This can potentially allow you to get a better interest rate and a higher score is a vote of confidence that will allow you to get almost all of the types of loans you want. As a result, you will probably want yours as high as possible, but how can you do it? Fortunately, there are many ways to increase your credit score (in addition to the quick repayment of your credit card bill and your debts).