If you're wondering how your credit score is calculated, the good news is that there are several factors you can control. First of all, the length of your credit history is a very important factor. Lenders are more likely to trust you to repay your loans on time if your credit history is longer. You can improve your score by repaying your loan over a longer period.
Payment history
Your payment history is one of the most important factors that will determine your credit score. Your credit score could be affected if you fail to make your payments on time. Plus, late payments remain on your credit report for seven years. It is vital to make all payments on time, even if they arrive a few days late.
Age of accounts
Credit scoring models evaluate the average age in your credit accounts. These information are used to determine your overall credit score. However, age-related factors can affect your score in different ways depending on the scoring model and company you use.
Age of credit limit
Credit score can be affected according to the average age and balances of your accounts. Creditors want to see proof that your accounts have been operating for some time. The older your accounts are, the more likely they are to have been used responsibly. However, accounts that are younger tend to be less mature and can affect your credit score.
Payments made on time
Timely payments are an important aspect of credit score. They are reported on a monthly schedule to the major consumer credit bureaus. Late payments can have a negative impact on your credit score of up to 180 points. Make sure you pay your bills promptly
Recent loan activity
Your credit score depends on your past loan activity. Your credit score can be affected by too many inquiries and new accounts. There are ways to fix it. It is important to first review your credit history and make any necessary modifications. You might open a new card, or get a small personal loan if your credit report isn't in order. In addition, make sure that you make your payments on time. You'll see an increase in your score over time if it becomes a routine to make timely and responsible payments.
Soft inquiries
There are several ways that soft inquiries can affect your credit score. For example, a lender may conduct a soft inquiry when you apply to a new credit card. Soft inquiries may also be conducted by insurance companies if you apply to homeowners or auto insurance policies. These inquiries are not visible to the public, but they will be added to your report.