6 Main Factors that Play an Important Role in Determining Your Credit Score

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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:

  1. Your payment history including credit card bill repayment, loan repayment, etc.
  2. Your ability to handle and maintain a healthy mix of credit cards, auto loans, home loans, education loans, etc.
  3. The percentage of credit limit you use each month
  4. Your total debt
  5. Your most recent credit behaviour in terms of the latest loans, enquiries and repayments
  6. 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.

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