Certain factors affect your credit report more than others. Your bank balance and your current income are surprisingly not included while calculating your credit score. Instead, your past loans and how you repaid them matters more. Here is a complete list of factors that actually affect your credit report.
Your bill payments
Whether it is the payment for your loans or other bill payments, your payment history will matter. If your home was foreclosed, you declared bankruptcy or if there were any collections, repossessions, charge-offs, or tax liens, it would reflect in your credit score. The bad news is that all these events stay in your report for as long as seven years. Even after seven years, your lender could consider you a high-risk candidate. These are one of the most financially destructive events you could witness.
Your level of debt
The current level of your debt makes up for at least 30 percent of your credit score. Your FICO score is determined by the level of debt you carry in relation to your credit limit. Also, your loan balance in relation to your original loan amount will also be taken into consideration. As a rule of thumb, you should not utilize more than 30 percent of your credit card limit. Too much debt could affect your score, even if you are paying your balances regularly.
Age of credit
Believe it or not, but the age of your credit matters a lot. It adds at least 15 percent to your score. The age of your oldest credit account and the average age of all your debt accounts are taken into consideration. The older your credit history, the better your number will be. If you open new accounts or close your existing accounts, your credit score could be affected negatively. Also, it will be better not to have several new accounts added at once. If you have bad credit, talk to Payday Pixie.
Type of credit
There are only two types of credits that an account can have – installment loans and revolving accounts. Surprisingly, it would be better to have both the types of credits. It will show that you can handle different types of loans with ease. If you have loans for several different types of assets like a home, a car, a personal loan and a student loan, your report will be much better. After all, the type of credit contributed at least 10 percent to your score. Not having a certain type of loan isn’t a bad idea but having one would be an add-on.
Number of credit inquiries
Up to 10 percent of your score depends on the number of credit check inquiries placed on your report. A couple of inquiries are not bad. After all, if you are taking any loan, an inquiry will be made for sure. However, too many of such inquiries during a short period of time means a red flag.
These were a few things that you may not know affect your FICO score or credit report. Focus on correcting all these things and you will be glad to receive a higher rating and better loans.