Which Factors Make up my Credit Score?
A credit score is an important factor that helps in making borrowing easy and affordable. You can work on building your credit score by the best credit activities and opt to check credit score option. Here’s how you can make up your credit score with the right factors –
Maintain a balanced credit mix
Get a good credit mix by maintaining a proper balance in your credit profile. Get a good balance between secured and unsecured loans. You need to have a suitable and balanced credit mix option, this means having both secured and unsecured loans.
If you have taken an unsecured personal loan, you need a secured loan like a home loan too. It will help you improve your credit score over time. Always choose a balanced credit mix for an easy and smooth borrowing experience.
Keep debt to income ratio low
When you decide to improve your credit score, you need to keep your debt to income ratio low under 30%. The debt to income ratio means the number of funds you use from income to pay your debt. It can be existing loans or credit card bills that you pay from your income.
If you already use 50% of your income for paying debt, you cannot get a good credit score. Therefore, you need to pay off all your existing loans and keep the ratio below 30% to get a good credit score.
Keep your credit utilization ratio low
The credit utilization ratio is very important for maintaining a good credit score. It is the ratio between the total credit limit given by the loan provider and the limit that has been exhausted by the individual already. Individuals that overutilize the credit limit available on credit cards and overdraft loans, do not have a good credit score.
You need to make sure that you keep your credit utilization ratio below 30% if you are to build your credit score. Even if you exhaust 100% of the credit limit, you can always make an extra payment to get back the available credit. Loan providers do not give access to loans for individuals that are in financial crisis by using the complete credit limit available to them.
Make payment timely
It is an important factor to consider if you are working on your credit score. You need to improve your credit score with the help of a good track record. Payment takes up to 25% of your credit report track. It is vital to have a smooth repayment and transaction history that can help you get a good credit score.
It is important to make timely payments so that you find it easy to improve your score. Payment is an important factor that decides whether you are eligible for a good credit score or not. Keep making the payment within the due date. You can Automate your payment or set reminders so that you don’t miss out.
Pay bills without any outstanding or overdue
It is essential to maintain a good repayment history by paying bills in full amount. You cannot keep any overdue or outstanding amount pending on your credit profile. Any overdue will damage your credit score and also makes your loan more expensive.
If you keep on paying the minimum balance on your credit card for the long-term it will lead to slow credit damage. You need to pay the full bill amount. Keeping overdue will damage your score by more than 50 points. A single minimum payment of the balance will not however impact your credit score.
Which Factors Make up my Credit Score?
It is important to know the fact that the application of loans is vital for a credit score. When you check your credit report, you will find the section where all your loan applications and credit card application will be stated. It is a vital factor in credit score.
If you want a good Credit score, you need to make sure you avoid multiple loan applications. If you need a loan for emergencies, you need to apply only then. After facing a loan rejection, you must work on loopholes other than applying for loans.
Keep credit account open
Credit age is an important factor that determines your credit score. The longer the credit age the better it is for building credit. You need to make sure that you keep the credit account with a long credit age open when you don’t use them.
If you have credit cards with a clean track record you can keep them open to increase your credit score. It will help you improve your credit score. New credit accounts do not improve your credit score.
Check credit score using the option of check credit score online from Clix Capital. It will help you improve and monitor your credit score.