5 factors that influence the credit score

When we refer to the credit score we must know that it can be influenced by several factors. One is, of course, the income. However, there are other important factors that we will discuss in this article. We also recommend that you review share and find reviews to find out more tips on credit scores, but you can also find other essential information.

What is the credit score?

The credit score (which some call a “credit score” or “credit report”) is the score that represents your financial image. It’s like a picture of your financial behavior and payment history.

This note tells creditors if, in the past, you paid off your debts as you went and on time. Simply put, your credit score indicates your ability to pay off your debts on time.

The score varies between 300 and 900, 300 being the worst and 900 being the best.

Your financial portrait, a matter of image

There are five key things that financial institutions consider when granting you a loan, line of credit, or credit card:

  • Your debt report
  • Your credit rating
  • Your monthly income
  • Your goods
  • Job stability and place of residence

What influences the credit score

Five main factors determine your credit score. Here they are.

1. Your payment history

It accounts for 35% of your rating. Of course, paying your bills, credit cards, or line of credit on time and in full is good for your reputation as a borrower.

Because you should know that any late payment that exceeds 30 days is noted in your file for several years, regardless of the amount. And the longer the delays, the more they will be reflected in your evaluation.

2. Using your credit

30% of your rating matters. If you use more than 50% of your credit card or credit line, it may affect your score. This is true even if you pay the full amount at the end of the month.

3. The date you opened your account

15% of your rating matters. The longer your account, the more long-term repayment patterns your creditors can see. And the longer the history, the better the score.

4. New credit applications

These represent 10% of your rating.

Every time you apply for credit, it is noted in your file. Financial institutions consider that if you make a lot of applications, it is because you are looking for a lot of loans and therefore you risk getting into debt. It may adversely affect your rating.

5. Number and variety of creditors

These represent 10% of your rating. The credit rating favors a variety of accounts, but not accounts of the same type.

Your score can be viewed by creditors from whom you are applying for a loan (a line of credit, credit card, etc.) to give them an idea of ​​your financial behavior. (However, your information cannot be viewed without your consent.)

If your evaluation is not good, your request may be denied directly. It can also be accepted at a high-interest rate or provided you provide guarantees or have a guarantor.

However, if your credit rating is not good, you can rebuild it. Therefore, the situation can always be improved!