Every financial decision you make can have an impact on your credit score.

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Factors that affect your credit score
4 years ago
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Most people realize that having good credit is very important. However, not everyone understands what good credit really is. Your credit can affect everything from your ability to get a credit card or loan for a house or automobile. Some employers even evaluate the credit scores of job applicants. Because your credit can impact so many different aspects of your life, it's very important to understand the factors of good credit.

On-Time Payments
When evaluating a credit report, the first thing that lenders check is payment history. If your credit report indicates a pattern of late payments on any types of bills, your credit score will be affected in a negative manner. One of the most important things you can do to maintain a positive credit history is to pay all of your bills on time.

Debt Ratio
In addition to looking at your payment history, lenders will also look at how much debt you are carrying. If you have several credit cards that are charged up to their limits, your credit will be impacted negatively even if you make all of your payments on time. Lenders don't consider individuals who carry large amounts of debt to be good risks when it comes to issuing additional credit.

Pattern of Responsibility
Lenders make decisions about creditworthiness by evaluating your ability to keep your total debt under control and your history of making bill payments in a timely manner. They feel that people who are able to live within their financial means and who choose to take responsibility for their existing debt are individuals who are likely to repay loans and handle revolving credit accounts responsibly.

Little Things Matter
It's important to keep in mind that every financial decision you make can have an impact on your credit score. If you want to maintain good credit history, you have to be mindful of remaining financially responsible at all times. It's possible to rebuild bad credit, but it takes time and can be very costly to do so. You're much better off establishing and maintaining a good credit history from the beginning than having to go through the process of rebuilding your credit.
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