Some Major Factors that Can Impact Your Credit Score

 

An individual needs to always be cognizant of the factors that could affect his credit score. Every time you try to create credit or look for a new credit card, vehicle loan, or mortgage, your credit score is taken into consideration. Your creditworthiness is determined by the three-digit FICO score, on which over 90% of financial decisions are based. FICO scores for frequent flyer credit card deals can range from 300 to 850, and depending on the credit-scoring mechanism, credit ratings from low to extraordinary may change. A "good" credit score is one that ranges from 670 to 739, whereas a score under 670 might hinder you from getting the best interest rates and conditions on loans.

If you pay special attention to the following elements, understanding how credit ratings are determined will help you advance your position:

• Payment history - Your payment history, which makes up about 35% of the total score, is the key factor determining your credit score. This demonstrates if you have historically paid your credit card or mortgage balances on time. It also provides information on any missed payments, such as the frequency of your lateness and the length of time the payment was past due. Lenders can anticipate your likelihood of repaying debt in the future with the use of this information. If you have a tendency to spend carelessly, you should thus be cautious about the rewards credit card offers.
• Amounts owed - 30% of your score is calculated from this factor. It is referred to as your credit utilization ratio and may alternatively be expressed as your debt load relative to your available credit. This is not about your overall credit limit; it is about how much credit you have actually used. If you wish to know your credit utilization ratio, you simply have to divide whatever debt you have on your credit card by the entire amount of credit you have access to. This enables you to understand how much credit you are now consuming. 
• New credit - Your credit score is 10% influenced by how many fresh credit accounts you request for. A hard inquiry is recorded on your credit report each time a lender runs a credit check for a new credit card, loan, or mortgage application. This has a temporary negative effect on frequent flyer credit card deals that gradually reduces over time, but it decreases your credit score by several points each time it happens.
• Credit mix - 10% of your credit score is determined by the different kinds of credit programs you have created. Credit cards, installment loans, retail accounts, finance business accounts, and mortgages are the many account categories that FICO classifies. Even if having a large number of accounts is not required and your credit mix only makes up a minor portion of your credit score, maintaining a diverse range of credit accounts and managing them appropriately displays to lenders your capacity to manage a variety of financial obligations.

Knowing your credit score might provide you insight into the kinds of goods you are qualified for before submitting an application for a new credit card or loan. Use Compare Credit Cards as a reliable resource to find out more about the different rewards credit card offers. You have the option to check your credit score for free through your bank or credit card company. It is always advisable to keep track of your credit scores. Regularly reviewing your reports can aid in spotting possible cases of fraud and identity theft as well as real mistakes that can be lowering your ratings.