Many individuals wonder how they can improve their credit score. It is not easy and it definitely takes time to see improvement, but it is possible. In this blog post I will show you some of the important factors that determine your credit score. With that in mind, you can attack these factors that may be bringing your credit score down with vengeance. These factors are not conclusive in determining your score, but they are major indicators determining the health of your credit score at the end of the day. Here are 4 factors that impact your credit score:
- Age of Your Oldest Line of Credit.
The age of your oldest credit account shows lenders how much experience you have handling your credit accounts. Unfortunately, to increase this category you need to keep a credit account open for a very long time (generally a mortgage helps increase this category). As a tip, keep your oldest credit account open and in good standing. This will help build positive credit history over time.
- Amount of New Accounts Opened.
Your credit score will be negatively impacted if you have a new accounts opened within the last 2 years. Also, if you open too many new accounts in a short window of time, lenders might wonder if your financial credibility is overextended. As a tip, only apply for new credit when you need it. And once you open an account, make sure to manage it responsibly by paying your bill on time each month and only using as much credit as you need.
- Available Credit Amount.
If you do not have enough credit available within your accounts, this is a sign of caution to lenders. A lender might see this as a sign that you are stretched too thin financially and may be unable to pay them back. As a tip, use less than 30% of your available credit (this provides a safety net in times of need). Also, keep in mind that using some available credit and paying it off monthly may be better than not using any credit at all because it shows you are responsible with your credit accounts. According to Creditwise, only 13% of borrowers have a rating of “Excellent” when it comes to total available credit.
4. On Time Payments.
A history of on-time payments shows lenders that you can manage credit responsibly. A payment that is late 30 days or more is often reported to the credit bureaus, and that is when you will see a dip in your credit score. According to Creditwise, only 62% of borrowers make their payments on time. Just as a tip, you can make sure all of your payments are on time by setting up auto payments through your credit provider.
That wraps up this post, thanks for checking it out and come back for my future content. Leave comments below and hit the like button if you thought this was useful!
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