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Credit Scores: What Are They?
Credit Scores: What Are They?
1. The most important factor that affects your credit score is payment history which
affects the credit score to almost 35%. Lenders are interested in what is your
payments history on all your accounts, the duration of your positive credit history and
how long you have been without a negative item, the number and seriousness of your
credit histories of offenses, and whether serious unpaid debts are present, such as
bankruptcies and foreclosures.
2. The credit score is heavily influenced by the amount of debt one has as it accounts for
30% of the influence. A high ratio of credit balances to credit limits, as well as a large
number of credit accounts, might have a negative impact on your credit score. The
amount of debt on each account, as well as the amount of debt paid off on term
accounts, have an impact on your credit score. Making periodic payments and
repaying instalment loans are two ways for consumers to demonstrate accountability.
3. Higher credit ratings are associated with longer credit histories. It has 15% influence
on the credit scores. The length of credit history, the amount of time certain accounts
has been open, and the period since each account was last utilized are all important
elements in credit ratings.
4. You also consider the amount of new loans you accept as a result of credit ratings. It
affects the credit scores by 10 percent. Credit scores follow consumers who
unexpectedly take on extra debts and are likely to be overreaching by examining
when and how many consumer accounts they have created in the past and how many
credits reports they have received.
5. In determining your credit score, your type of credit will play an important role. For
your score, a "healthy mix" of payment loans and bank revolving credit is better. It
affects the credit scores by 10 percent.