Your Credit Score – What Affects It

Your Credit Score is one of the most important ratings you’ll have to worry about in your life. It determines how much you can borrow, what you can buy, and a variety of other things. With a higher credit score you’ll find many opportunities that weren’t available to you before, such as financing a new home, or buying that brand new car you’ve always dreamed of.

Why Strive for a High Credit Score?

Most importantly, you’ll qualify for lower interest rates, which will translate into real savings on any loan you take. Also, people trust you much more when they see you have a high credit score – a priceless asset.  In short, your credit score is not something you want to be low. Here are the top factors that are used to determine your credit score.

Your Payment History

Probably one of the most obvious factors in determining your credit score is how consistent you are with making your payments. When you pull out a loan, no matter how big or small it is, you need to be sure to pay on time every time. Doing this shows the credit bureaus that you’re someone worth trusting with a loan.

How Much You Owe

Another very important factor in determining your credit score is how much you currently owe compared to your total available credit. Your credit score tells creditors how likely it will be that you pay your debt back in full, and having your credit maxed out isn’t a good indicator that you’ll be paying any new debts off. Try to pay off your current outstanding debts and attempt to raise your credit limits to give you a better ratio.

Your Credits Age

Although not as important as the previous two factors, your credit’s age is defiantly a big indicator in how high your credit score is, mostly because it’s easier to see a person’s behavior patterns over an extended period of time, when if the person has had credit for a short amount of time you can’t really tell how the person reacts under pressure. Significant credit boosts have been given to people that were able to pay their bills in-full and on time even when they had lost their jobs, one of the positive benefits of a high credit score.