Maintaining a good credit score is not rocket science. Instead, it is much simpler than what you expect it to be. Many of us know the importance of a fair credit score in our financial life. But what a majority don’t know is the process of calculating it and the factors that come under consideration. There comes the importance of the best credit repair software.
Any financial lender will judge you based on your credit number, which ranges from 300 to 850. The more, the better. Therefore, all you have to do is to know these deciding factors and apply them practically. In this article, we present the 5 most important factors that affect your credit score.
Valuable Factors of Your Credit Score
- History of Your Payments: The first and the most crucial factor is your payment history. Regular, timely payment history is the most straightforward strategy to have a high credit number. A single missed or delayed payment can affect your score drastically. Stats says, 90% of financial lenders consider this factor as their number one priority. Payment history reflects your nature of paying your debts on time.
Lenders check this payment trend and decide whether you are reliable and how well you manage your funds. Remember, payment history accounts for the bulk of your score, nearly 35%. So, if you can master the practice of paying funds on time, then consider half of your work to be done without any hassle. If you consider improving your already damaged credit score, choose the best credit repair software for you.
- Owed Credits: If you are going in-depth to learn about the calculation of your credit score, then you should know about the credit utilization ratio. This particular ratio represents your entire credit usage algorithm and accounts for about 30% of your credit number. It is calculated by dividing your total revolving amount by the total revolving credits extensions.
The objective of the credit utilization ratio is to reflect your usage of the available credit. It shows how good you are at handling non-cash funds. The usage of 30% or more of your existing credit is deemed to harm your credit score.
- Length of Your Credit History: The third deciding factor is undoubtedly your credit history length. Also, 15% of this factor is accountable for your credit score. Credit history length considers the age of your oldest loan account and the age of your latest loan account as well.
Moreover, it also incorporates the average of all the credit accounts you have had in your life until the present. Lenders, consider for how long you have been handling credit funds and the experience you have. Generally, the longer is your average credit history length, the higher will be your credit score.
- Recent Credit Accounts: This factor owes about 10% of your credit score and is dependent on the recently opened credit accounts. Moreover, it also considers the number of hard inquiries lenders tend to make when you apply for funds. The more the amount of the inquiry, the more you seem to be unreliable. Too many or bulk inquiries can lower your credit score to a considerable amount.
- Mix Credit Accounts: Having a mixed credit account owes 10% in your credit score. Trends show that those with credit portfolios in different credit accounts like a car loan, mortgage, or student loan have higher credit numbers. This indicates their efficiency in managing a wide variety of credit products seamlessly.
Having a high credit score is reassuring for your finances. However, even if you have a low score or want to have a good score in hand, there are options available. The best credit repair software in the market can help you regain your lost credit with the minimum effort. So, do your research, choose the best option for you, and get your credit scores surging high.