Your credit score determines how
much viable you are to borrow or qualify for financing. It is what many lending
institutions look at to determine the risk of lending money to you or say any
other borrower. Many people seek financing options when they want to buy houses
and cars. An ideal credit score will come into play at this point in time. Here
are some of the top factors that will affect your credit score.
Loan Payment History
This one plays a huge role. It is
the most basic component of your credit score. It determines if you can be
entrusted to repay money lent to you. It will consider simple factors
including, if you have paid up your bills for every account on your credit
report, if you paid on time, late, or even if you defaulted, the number of your
accounts that have gone to collections, and if you have any suits,
foreclosures, bankruptcies, debt settlement charge offs.
The Amounts Owed
Another very vital component is
what you owe. It will ask the following questions, how much of your total
credit have you used? Are you responsible and stable enough to pay the money
back? How much do you owe on mortgages, auto loans, installment accounts, and
credit cards? Then at the end of it how much do you owe in total? One expert
from the Mexican Auto Insurance says that many
auto insurers look into this before giving you an insurance cover, discount, or
rate.
Your Credit History
The length of your credit history
will come in play too. How long have you been using credit? How old is your
oldest account? What is the average age of all your accounts? If you have long
history that’s clear of any late payments or any other negative items you will
be considered so much credit worthy. That’s not to write off a short history.
If you have made your payments on time and owe pretty little you should be good
to go.
Your New Credits
FICO score is part of Credit Score
determinants. It looks at the number of new accounts that you have applied for.
It also looks at the last time you opened up a new account. If you have opened
so many within a short time you could be a high credit risk. It bases this on
the finding that many guys tend to open up many new accounts when they are
experiencing cash flow hitches.
Types of Credits
Do you have a mixture of different
types of credits? There are many types of credit including store accounts,
credit cards, mortgages, and installment loans. Having all these accounts will
boost your credit score but to a very small percentage. Don’t worry if you
don’t have many of such credits.
Anyone who needs an auto loan,
mortgage, or needs to borrow some money needs to have a very strong credit
score. This will boost your chances and help you in getting your loan approved
very fast.
