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Things that will impact your credit score the most

By Ruth Racey
Published: Sunday, August 24th, 2014

If you are thinking about taking the loan now or in near future, you should be aware of the fact that the terms you will be offered are mainly dependent on your credit score. You should know which factors will influence your credit score the most – below are few things you should really keep an eye on, in order to improve your credit score before applying for next loan.

The most important thing that has impact on your credit score is your repayment history. Be sure to check your credit report and find out if there are any errors made with your previous payments (believe it or not, even in time of computers and internet there may be some). This can be done on your own and shouldn’t take too much time unless you have a very long credit history. Next thing you need to be looking at is what you owe to your lenders at this time. Your debts are presented in form of credit cards and other loans you may have now, if you have any extensive debt at this moment it will greatly reduce your overall credit score. In case of having more than one debt (such as with multiple credit cards) you should try to reduce the amount you owe down to under 30% of allowed limit, there is no point in bringing one of your debts all the way to zero if you still have another that is way over the above mentioned limit.

Next thing that can greatly influence the overall credit score is servicing your old debts. As surprising as it may be, if you have been using loans in the past and if you have been able to repay them in time this is going to really positively affect your score. Another thing that has influence is the numbers of times you have applied for a loan or a credit card, in case you have been applying for loans too often this will negatively affect your overall score. Next thing that has great influence is the diversity in types of loans you have been taking, for example if you have been applying for credit cards only or just asking for bank loans they will have negative effect on your score. The reasoning behind this is that you need to show your ability to use different types of bank loans and repay those on time – the better you can do this the higher your score will be.

There are other things that can affect your overall credit score but they are not as important as those mentioned above. If you are thinking about applying for a new loan make sure to check in which “fields” you can make most improvements. You may not be able greatly improve or make corrections in all areas that are mentioned here, but just making a small steps forward in any of these fields may be just what you need to get a better credit score and create better conditions for your next loan.

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