Here are the 4 Important Factors That Determine Your Credit Score

Learning what affects your credit score is important if you want to improve it. After all, your credit score can determine whether you can get a loan or not, and if you do get approved for a loan, the interest rate will likely be much higher than someone with a good credit score. So what are the four factors that affect your credit score the most? Keep reading to find out!

1. Your credit history (accounts for more than a third of your credit score in some cases). Whether or not you have been a good credit risk in the past is considered the best indicator of how you will react to debt in the future. For this reason, late payment, loan defaults, unpaid taxes, bankruptcies, and other unmet debt responsibilities will count against you the most. You can’t do much about your financial past now, but starting to pay your bills on time, starting today - can help boost your credit score in the future. 

2. Your current debts (accounts for approximately a third of your credit score in some cases.. If you have lots of current debt, it may indicate that you are stretching yourself financially thin and so will have trouble paying back debts in the future. If you have a lot of money owing right now - and especially if you have borrowed a great deal recently - this fact will bring down your credit score. You an boost your credit score by paying down your debts as far as you can. 

3. How long you have had credit (accounts for up to 15% of your credit score in some cases). If you have not had credit accounts for very long, you may not have enough of a history to let lenders know whether you make a good credit risk. Not having had credit for a long time can affect your credit score. You can counter this by keeping your accounts open rather than closing them off as you pay them off. 

4. The types of credit you have (accounts for about one tenth of your credit score, in most cases). Lenders like to see a mix of financial responsibilities that you handle well. Having bills that you pay as well as one or two types of loans can actually improve your credit score. Having at least one credit card that you manage well can also help your credit score. 

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SKELLEY24


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