What Determines Your Credit Score (DOC)

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					                                   What Determines Your Credit Score?

Do you think your credit history represents your worthiness to receive loans on credit? The fact is that
yes, it does. As your credit score influence your finances in many essential ways, so it’s
imperative to better understand its very importance and facts concerning it.

Credit score is basically a numerical expression based on a statistical analysis of a person’s credit file
and summarizes historic credit information. Since the score symbolizes your worthiness of receiving
loans, it represents the probability of whether one will become delinquent on a loan or credit obligation in
the future.

In short, credit lenders want to make sure of your score before rendering any loan on credit. Normally, an
ideal credit scores ranges from 350 to 850 and the greater the score the greater the credibility. If the
score falls in somewhere around 700, it is considered favorable, and with a score ranging around 600, the
creditor would look to other factors to determine credit risk. The credit report is used to determine a three-
digit number based on payments being paid on time, balances on accounts, amount of available credit
and length of credit history.

Subsequently, there are numerous factors which influence one’s credit score and are responsible for
determining it, such as:

       The lump sum amount of money owed by an individual, which means that the more one owes,
        there is a comparatively lower credit score and less chance of receiving further loans.

      Payment of bills is one such factor, which determines one’s worthiness of receiving loans as it
       adds up to a better score and is reflected in your creditreport.

      Amount of credit inquiries on your account is important as the more inquires on your account the
       chances of your score lowering are often greater.

      Another such factor is the number of accounts one owns, as high credit balances automatically
       lower one’s credit score and affects credit scores directly. A moderate balance, which is paid from
       time to time, is ideal for getting better scores.

      Credit limit is essential as it’s important to determine how close you are to your limits. Nearing the
       limits on your account reflects negatively on your credit score and thus decreases your essential

       How long ago your credit was established helps in finding out the accurate score. If your account is
       long established it’ll automatically increase your score to a more positive number.

      Negative credit history such as liens, foreclosures or bankruptcies will negatively affect your credit
       score and if your account is secure or unsecured.

It’s important to check your credit scores more often than once a year, and credit monitoring services can
help you with keeping track on your credit score through alerts, so you can more easily maintain healthy
credit scores.

Description: As your credit score influence your finances in many essential ways, so it’s imperative to better understand its very importance and facts concerning it. Know what determines your credit score and how your score gets affected.