Influencing Your Credit Score

Your credit score is an essential component of your financial status. If you want to apply for a mortgage, a car loan, a credit line or another financial instrument of this kind, the lender will always check your financial background and one of the most important things they will look at is your credit score rating. That is why it is very important to keep it as high as possible, so that you may benefit from a loan with a low interest rate and you would not have to worry about being denied a loan or credit card application.

It may not seem like a big deal to you now, but the difference between a low and a high credit score can mean not only the difference between a loan at a high or low interest rate, but it can also mean the difference between whether or not you are able to secure a loan at all.

However, you do not need to panic, as there are many ways in which you can improve and maintain a high score. Basically, your score is a three digit number made up of every piece of information there is to know about your financial history, from previous loans and credit lines to current outstanding debt and payment history.

This means that even an unpaid bill can make a difference, and a big one, since around 30 to 35 percent of your score rating is made up of your payment history. So don’t be lazy and pay your bills on time, because a little thing like that could mean a considerable difference in the percentage of the interest rates offered to you with the loan you are applying for.

The income and debt ratio, which is basically the difference between what you have and what you owe at a certain moment in time, makes up for another 30 percent of your final score. That means that in order to keep a good credit history, you need to borrow 35 percent or less than the amount you have available at one time (that is, of course, if you can achieve that).

Another important factor in calculating your credit score is your credit history; this includes the number of your bank accounts and the amount of time they have been open for. Basically, when it comes to your credit score rating, it is best to keep your credit accounts open for as long as possible, even if you are not using them anymore, because this will ensure a good credit score. Your credit history accounts for about 15 percent of your final score.