Five areas worth Scrutinizing to boost credit score
Credit scores are highly important as it is taken from one’s personal credit history. The
current credit lending situation has become quite tight today as lenders now follow strict
procedure before offering financial aid to anybody.
Borrowers and lenders review grades before they offer loan and even decide on monthly
installments. The worthiness of an individual is judged by his credit report, as certain
details in it would signify how one manages his debts and other finances. To be very
precise, your risk level is determined by reviewing your credit file.
So you wanted to boost your credit grade? First, let us understand the basics and the ways
to enhance it.
1. It is highly important to pay your bills or dues. Creditors report to the credit
bureaus about unpaid accounts, which is main cause of poor score. Nearly 35
percent of your credit grade is calculated through payment history. Unpaid library
fines, medical bills or parking tickets affect the grade to a great extent.
2. About 30 percent of your credit score is the output of the amount you owed to the
creditor. Your excess credit limit will make your credit score to suffer.
3. If you have few and old accounts, which you have paid on time, then it will prove
beneficial for your grades. Your credit history adds up to15 percent in score
calculation. During calculation of grades, last activity of account is taken into
calculation so it is suggested that you do not close old accounts and take care of
timely payments. This will help in cleaning patch on your credit report.
4. About 10 percent of the grade is calculated using recently opened accounts
compared to that of total number of opened accounts. Another factor which is
taken into consideration during score calculation is the number of recent inquiries.
5. The last 10 percent is determined by looking at the type of credit used
(individual’s borrowed credit). If an individual under debt needs to pay huge
amount every month, how will he or she be able to pay other debts like credit
To sum up
Your score drops when you look for new or other sources of credit, which in the
creditors’ mind points to financial instability. One should be careful before finalizing
for auto loan or mortgage, as with every credit check by creditors, your score may get
lower. Learn more about managing your finances and understanding your account and
see your credit score climb up. Make sure to check your credit file regularly and fix
the loopholes in your credit history.