Obtaining a credit card or a loan depends upon how good your credit scores are. However, do you know the factor having significant impacts on your credit score? Vivid knowledge of those aspects is crucial if you want to keep a better-looking credit score.
It’s pretty similar to how buyers explore products before purchasing them. For example, assume you want to buy a water purifier through online sites. Firstly, you will compare water purifiers and find the best one suitable to your budget.
Managing your credit score is also similar. Unless you get a deeper insight, you will never be able to recognize actionable measures. Hence, let’s go through the following section to know about some of those factors.
- Prior Credit Repayment Report
Your credit score’s position is about looking at the history of your last credit repayments to ensure whether you fall among the timely payment makers or not. Your credit score will automatically ascend if your track record is clean and you have paid all installments within appropriate periods.
- The Credit Mix
When people hold at least one account of secured loan, whose debt period is elongated, it’s regarded as a good credit mix. If the unsecured loans you have will propel you towards associated disadvantages, the presence of that secured loan will be proffering enough quantities of oxygen for your credit score’s wellbeing.
If we compare the situation with anything else, it would be like, despite having the gas cylinder finished, you can make a nice cup of coffee if you have the best electric kettle in India.
- The Credit Amount
As far as the credit utilization ratio is concerned, using your credit amount is also an essential factor for your credit score. You can get your credit utilization ratio by using the total limit of your revolving credit. You only have to divide the amount of revolving credit you are utilizing with it. If you require discerning the number of credits being used along with your level of dependency on non-cash funds, you should consider this ratio. If the ratio of credit you are using is somewhere over 30%, it would be held as unfavorable by creditors.
- The Length of Credit
The period through which you have held the amount of your credit is also responsible for deciding the credit score. This method considers your oldest and newest credit account and figures out the average age of all the accounts you possess. In this way, your credit history’s length increases your credit score.
Notes on How to Improve Your Credit Score
It is imperative to repay your loans timely. Hence, ensure it at first. Keep in mind that even a single failure in paying your EMI affects your credit score adversely. Therefore, the second thing you should do is checking the status of your credit score regularly. Go through it precisely because, in case you notice any error, you have to file a report in the credit bureau.