Improving the credit score

| February 10, 2014

Credit score is what determines the financial status of a person. Those who want to borrow money for their financial requirements should be focused on maintaining a good credit rating. A good financial status would improve the chances of the borrower in securing the personal loans for bad credit they require. In this article, borrowers would be explained about the various factors that have to be taken into consideration in order to make sure that their credit score remains at a better status throughout their lifetime.

Impact factors

In the first place, one should be aware of the factors that would impact the credit score the most. Only after knowing this, one would be able to understand how to prevent any negative impact on the credit score. Credit score would have an impact from five different factors and they include payment history, debt utilization, age of credit, account status and the number of inquiries made by the individual. Each and every impact factor would be discussed further in this article.

Impact caused by a payment history is the most important one, and it has around 35% impact on the credit report. Time taken by the individual or the organization to pay all their bills on time would determine the type of impact it would have on their credit rating. Paying bills on time would have a positive effect whereas delayed or late payments would have a negative effect. Debt utilization has around 30% of the impact on the credit report. It is always better to utilize lower debts. Higher the number of open accounts, higher would be the credit score.

People who possess multiple credit cards should not close a credit card all of a sudden with a view of moving onto a better credit card. This would affect the credit score very badly. Another important factor is the number of inquiries performed by the person. Multiple loans with no credit check inquiries would cause a lot of damage to the credit report. Thus, it is necessary to evaluate a loan program and understand whether it would be eligible for them and only then should proceed further.

A stable and steady income source would improve the ability of the individual or an organization in performing all their bill payments on time. It is always better to reside in a particular locality for a longer duration of time since it would be easy for the person to manage their finances. Shifting houses would create a miscalculation and it might be time consuming to get back on track and by the time things get right, the person would have lost his or her good credit status.

Benefits of having a good credit score

A good credit borrower would be able to obtain the loan they have dreamt of. Those loans would fetch them the house or car or education or ornaments or any other requirement they have. The loan they would obtain would have attractive interest rate charges. A lower interest rate charged on the loan would only reduce the monthly payments that have to be made on the loan.

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