Changes in your credit score, but not your report?

Factors affecting your credit score:

  • Credit history length:

This includes the age of your new and oldest credit account and average age of all your accounts. Usually, the longer your credit history, the higher your credit scores.

  • Payment history:

          It is the most important factor in credit score, and impact of one missing payment on your credit score can be very drastic. While you are being considered for a new credit, the lenders will make sure that you pay your debts on time.

  • New credit:

This tells you about all the new accounts that you recently opened. Risk is increased if you have too many accounts or inquiries, which in turn will hurt your credit score.

  • Credit utilization:

Your credit utilization is calculated using credit utilization ratio, which is obtained by dividing the total revolving credit you are currently using by the total of all your revolving credit limits. This ratio tells you the utilization of your available credit and gives you a summary of how much are you relying on non-cash funds.

Factors hurting your credit score:

  • Applying for a lot of credit in a short time:

A hard inquiry is recorded in your credit file every time a lender, for a lending decision, request your credit report. These inquiries stay in your file for about two years and will cause your credit score to go down slightly for a short time.

  • Missing payments:

It is the most important factor affecting your credit score. Even one missed payment or one 30-day late payment can have a significant negative impact.

  • Defaulting on accounts:

Reposition, bankruptcy, charge-off, foreclosure, settled accounts can have a negative impact if they show up on your credit report. Each one of these can drastically hurt your credit for years, even up to a decade.

  • Using too much available credit:

High credit utilization can have a bad impact on your credit score as its shows that you are dependent on credit. This is calculated using credit utilization ratio. The lenders refer a credit utilization ratio of over 30% as bad and under 10% as good.

Improving your credit score:

  • Pay down debt:

Credit utilization ratio can be decreased by reducing your credit card balances. This is one of the quickest and most efficient ways to see a credit score boost.

  • Dispute of incorrect information on your report:

Your credit score can suffer because of an incorrect information in your credit file. You need to periodically monitor your credit reports so that any in-correct information can be identified. Initiate a dispute as soon as possible if you find anything.

  • Bill payments on time:

Payment history is the most important aspect in the upbringing of their credit score. A simple task of paying your bill on time every month is very critical for increasing your score.

  • Limitation of new credit requests:

If you limit the number of times you ask for a new credit then the hard inquiries on your credit file will also be reduced. Hard inquiries stay on your credit report for 2 years but it may be noted that their impact fades over time.

  • Make an outstanding payment:

Updating any payments that are past due, may save your credit score for taking an even bigger hit.

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