6 Main Factors that Play an Important Role in Determining Your Credit Score
6 things that affect your credit score.
When it comes to a discussion on applying for loans, insurance policies or credit cards, one term comes up again and again. Credit score. But what is it? It is a number ranging from 300 to 850 (the higher, the better) which is calculated by credit bureaus based on credit information reported by banks, lending institutions and other financial institutions.
A credit score determines whether banks and other financial institutions will lend you money, give you a credit card or give you insurance. Your credit score shows them whether you are a credit-worthy borrower or not.
Here are 6 main factors that play an important role in determining your credit score:
- Your payment history including credit card bill repayment, loan repayment, etc.
- Your ability to handle and maintain a healthy mix of credit cards, auto loans, home loans, education loans, etc.
- The percentage of credit limit you use each month
- Your total debt
- Your most recent credit behaviour in terms of the latest loans, enquiries and repayments
- Total available credit
Keep an eye on your credit score and make it a habit to check your credit reports and credit score a few times each year.
Btw, do you check your credit score regularly? Most of us don’t.