What affects your Credit Score

Do you know that your financial stability is the most important part of your credit score? It makes sense, if I am going to lend you money, I want to know I am going to get it back.

Most credit scores range from three hundred to nine hundred points and the higher your score, the greater facility you get while borrowing money from the market. There are many factors that can affect your credit score. Factors can have both good as well as bad effects.

FACTORS WHICH NEGATIVELY IMPACT YOUR CREDIT SCORE

  • Late or Missed Payments first and formost. Pay your bills on time. If you cannot meet a payment, inform the lender asap. If you have a good reason and agree a date when you will be able to make the payment, the lender will look more favourably on you and may not give you a black mark on your report. If you agree an alternative payment date, stick to it. Under no circumstances should you miss this payment.
  • Using over 80% of your available credit indicates to a lender than you are close to borrowing as much as you can realistically afford to pay back. At this point, the lender may feel there is a real chance you will struggle to  make repayments at some point in the future and this can be enough for your application to be refused.
  • Bancrupcy, County Court Judgments and Default payments are all likely to cause your problems when applying for credit.
  • Unsteady employment or long periods of unemployment are likely to raise questions with the lender as to your ability to keep to any financial commitments you may have.
  • Numerous request for credit can indicate that you have been refused credit elsewhere which in itself is likely to cause concern for a lender. It may also indicate that you have been given credit elsewhere and are still looking for more. How much more do you want? How much are you going to apply for? All of these questions are relevant when a lender is making a decision to grant you credit. The less doubts about your ability to pay it all back, the have the better your chance.
  • Having no credit history is a common problem especially for younger lenders. If you have no history at all, a lender cannot make a decision as to your credit worthiness and often will refuse credit. If you are planning on getting something on credit but have no history, it is advisable to start thinking of ways you can “get on the ladder” so to speak.

FACOTRS WHICH POSITIVELY IMPACT YOUR CREDIT SCORE

  • Pay your bills on time. This is without a doubt the best thing you can do. If you pay your bills on time every month you can rest assured you are doingthe best you can to maintain financial control. You still need to monitor your report to maintain accuracy and to prevent Identity Theft but if you pay your bills on time, lenders will want you as a customer. If you cannot meet a payment, inform the lender asap. If you have a good reason and agree a date when you will be able to make the payment, the lender will look more favourably on you and may not give you a black mark on your report. If you agree an alternative payment date, stick to it. Under no circumstances should you miss this payment.
  • Use as little of your available credit as possible. By doing so, it indicates that you can comfortably take on the financial commitment of repaying the debt.
  • Continuous employment. Showing that you have a regular income can help assure a lender as to your ability to repay the debt.