Important Factors that Determine Your Credit Score
Did you know that there are several factors that determine your credit score? What's more interesting, you neglect many of them. One of the most important factor that can hurt your credit score is your missed payments. If you miss a payment, your score can get damaged 50 or more points.
Your credit score shows your lender if you're a trustworthy customer, if you're responsible with your money and if you’ll pay them back. The lower your score, the more cautious your lender will be and they may not even give you a loan.
So, a credit score is ranged anywhere between 300-850. It's made out of a range of pertinent factors, which differ from bureau to bureau. However, your score should be similar for all bureaus, give or take 20 to 50 points.
The most common ways of scoring are:
- Your Payment History is 35% of the score
- The Amount of Debt You Have is 30%
- Your Credit History is 15%
- The Way You Spend the Money A.K.A New Spending Information is 10%
- The remaining 10% depends upon how many credits you have
What is a good score though? Well, let's go from the bottom to the top, shall we?
A poor score is between 300-579, where you won't get any kind of loan from any company. A medium score goes between 580-619. An OK score is 620-679. A good score lies between 680-699. A very good score is somewhere between 700-759 and finally, an excellent score is anywhere above 760.
With an excellent score, you're guaranteed any kind of loan you apply for. This is how lenders calculate your credit card history and where your score should be. Keep these things in mind when reading your credit card report, they will help a lot!