Finance & Loans
Avoid these factors that can affect your credit score
June 4, 2014 by elegant · Leave a Comment
Three main credit bureaus, Equifax, Experian and TransUnion, use different factors to calculate your credit (FICO) score. However, there is a common theme that can be identified. They include the following factors:
On-time payment history: One of the criteria that can heavily influence your credit score. It is critical that you pay your bills on-time and one or more late payments on your credit history will negatively affect your credit score.
Utilization of credit: This tells lenders whether you are dependent on credit or not. Try to keep the balance on your credit card around 20 percent of your total credit limit in order to get a higher score.
Age of open credit lines: Creditors look at your open credit lines and how long they have been opened in order to determine your creditworthiness and come up with a credit score.
Adverse (derogatory) comments: They could come from various sources. Bankruptcy, tax liens, foreclosures, judgments against you and your properties and accounts in collection negatively affect your credit score.
Number of open credit lines and inquiries: Your credit lines including credit cards, auto loans, other loans and mortgage and they can influence your score. Hard inquiries made by financial institutions also increase suspicion and may affect your score.