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The Main Determinants of Your Credit Score

By Ruth Racey
Published: Tuesday, February 23rd, 2010

There are a lot of people who wants to get a better credit score. In this case, remember that high credit scores actually brings in a lot of benefits to one’s financial account, while  low credit scores surely brings in disaster to any credit card account. This are the reasons why knowing how a credit score is determines is necessary, especially for people who wants to have a better credit score.  

Whenever you have a high score, usually, you are able to get the loan that you need. This is because of the fact that lenders will actually be very willing to lend money, due to the reason that they see that you are able to pay them in the future. Meanwhile, when you have low scores, usually, lenders will think twice in lending you money, having your loan application disapproved. In addition, having a high credit score would make you pay low interest rates, while having a low credit score would make you pay for high interest rates.  Here then are some of the main determinants of your credit score that may help you have higher and better ones: 

  • Payment history
    Your payment history is all about the records on how you have paid your debt in the past. In this case, remember that your score is actually a measure of your credit worthiness, which is basically the indicator of your ability to pay for your debt. In this case, when you have bad payment records, in which you have a history of regularly paying late among other things, you will surely have a bad score. 
  • Recent delinquent payments
    In this case, even though you may have a good payment history, whenever you have recent records of delinquent payments, especially when it is already 30 days late, expect yourself to have bad scores. Remember that having a good score involves regularly paying your debt on time. 
  • The amount that you actually owe in your credit card
    Thus amount is called your credit to debt ratio. It is the ratio between your outstanding balance and your credit limit. In this case, having a low credit to debt ratio means high scores, while having a high credit to debt ratio means low scores. Therefore, always check the amount of debt that you have incurred. 
  • Credit history
    The length of your credit history also has a say; the longer the credit history, the higher the credit score.

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