Our News

College

How to Improve Your Credit? Top Factors that Impact Your Credit Score.

Credit scores play a pivotal role in our financial lives. Do you have any idea how to push this 3-digit number higher so you borrow cheaply and improve your lifestyle?

Here are some areas that you might have missed when you were trying to figure out why that score of yours never seems to increase.

1.Payment History

Payment history has the largest impact on your credit score. It’s also one of the major factors that a lender considers before approving you for credit; may it be to buy a car, to rent an apartment or simply to lower your credit card interest rate.

On-time payments are crucial, especially when it comes to requesting new credit. Therefore, make sure you make your payments on time, all the time because one missed payment will undoubtedly hurt your credit score.

2. Credit Utilization

Credit utilization refers to your credit card balance compared with its credit limit. It is the second major area that could be used to improve your credit score.  

As your credit utilization increases, you’ll find that your credit score keeps decreasing. High credit utilization means that you’re spending more than your current income or had some significant expenses at one point that you could not repay quickly.

This could make the lender quite hesitant in granting you a loan or renting that rather comfortable apartment. There is a greater chance, your loan application would be declined, or you might have to pay high interests if the loan was approved.

Well, you wouldn’t want that to happen, would you?

Therefore, it’s always advisable to pay down your credit card bills until you are using less than of your credit limit.

3. Age of Credit

Some things in life only get better with age. Well, believe it or not! Your credit score is one of them. The age of credit is the average age of all your credit accounts. It’s impossible to have a high credit age if you’re young, as it would obviously be lesser than that of a person who has had a credit file for a while

Well, you needn’t worry about anything if you pay your bills on time and keep your credit utilization in check. Your credit age will take care of itself!

4. Total Accounts/Account Mix

Also known as a credit mix, an account mix refers to the various accounts that make up your credit report. Different types of credit that would include in your account mix are credit cards, automobile loans, mortgage loans, and student loans. Account mix is only a small component of your credit score, but it would get the spotlight if your credit report does not have more information on which the credit score can be determined.

Nevertheless, you shouldn’t apply for additional credit cards and loans in an attempt to improve this portion of your credit score, as it could negatively impact other areas of your credit score such as credit inquiries and the average age of credit.

5. Credit Inquiries

Credit inquiries have a smaller impact on your credit score. There are two types of credit inquiries called hard inquiries and soft inquiries. Only a hard inquiry can affect your credit score. When a prospective lender reviews your credit, it is called a hard inquiry. It will take place when you have applied for a mortgage loan, an auto loan or a credit card.

If you look at your own score through platforms like Trifigo and others for awareness purposes, this will count as a ‘soft’ inquiry and will not affect your credit score.

In conclusion, knowing what affects your credit score will certainly help you in your journey towards improving it.

These factors will help you to boost your credit score and to make better financial decisions.

For stay in the loop, Subscribe to our Youtube Channel and follow us on Social Media.

YouTube – https://www.youtube.com/channel/UCCTxs-YeMp3Ig55LwJp6zHQ/featured

Instagram: https://www.instagram.com/trifigo/

Facebook: https://www.facebook.com/tritonfinance/

Twitter: https://twitter.com/TriFigo

Linkedin: https://www.linkedin.com/company/trifigo

Leave a Comment

sing in to post your comment or sign-up if you don't have any account.