You know you need a good credit score to get the kind of reputation that provides you with loan approvals and low-interest credit rates. A credit score influences the interest rates of your loans and credit cards. It also determines whether your application will be approved or rejected. Having a low credit score can affect your credit card limit, loans, etc.
However, you can hire a credit repair company near your Miami, Florida, home to help you. Asking the help of a credit repair company can help you rebuild your credit score. But do you know the factors that affect credit scores?
Payment History
If you pay on time, you are protecting your credit score. The inability to pay your bills on time will get you a bad credit score. This is one of the biggest factors to determine if you have a good credit score. You get disapproved when you have a record for collections, charge-offs, repossession, foreclosure, tax liens, and bankruptcy. If you cannot pay for anything, then you shouldn’t take a loan.
Debt Level
Your credit score is affected by your level of debt. Your overall debt, credit card balance ratio or credit utilization, and the loan balances from the original loan are all classified as debt. As long as you’re not addressing these properly, your credit score will be decreased. Additionally, your credit card utilization should be kept at 30% or less.
Credit History Age
This is the history of your credit, from your initial loan, which can affect your credit score. For example, if you have an old credit card, you can opt not to close that account because it’s evidence of your experience with credit management. It’s best to use a limited number of credit card accounts so that you can properly manage those cards.
Credit Report
There are two types of basic credit accounts: installment accounts and revolving accounts. Choosing both is beneficial for you because it shows your experience with having different kinds of credit. As long as you can pay for it, having different loans like a car or home loan can positively affect your credit score. On the other hand, that doesn’t mean you need to have all kinds of loans. Just choose the one that will help you have a good credit score which you can pay.
Credit Inquiries
Credit inquiries can also affect your credit score. A credit report will be filed every time you apply. While 10% of your credit score goes to inquiries, several of those can take off points from you. Be sure only to submit applications when necessary.
Factors That Don’t Influence Your Credit Score
There are also factors that don’t directly affect your score at all. These are your income, employment status, and bank balance. These can affect your chances of approval but not the algorithm that computes your score.
Final Thoughts
Getting a good credit score should be your top priority because there are times when you need to have a good one to purchase something big. Study these factors and try to include them when you’re managing your credit. Lastly, try to follow the principles to get a good credit score because there are many times when you’ll need that.
