You can control many factors that affect your credit score. The length of credit history is one of the most important factors. The more senior your accounts, the more lenders will trust that you can pay them back on time. You can also boost your score by repaying your loans for a longer period of time.
Payment history
Your payment history is one the most important factors in determining how credit scores are determined. Your credit score could be affected if you fail to make your payments on time. Late payments will remain on your credit report up to seven years. It is important to pay your bills on time, even if it is only a few business days late.
Age of accounts
Credit scoring models take into account the average age of credit accounts. This information is used to calculate your overall credit score. However, different age-related factors may affect your score depending upon the scoring model you use.
Credit limit age
Credit score can be affected according to the average age and balances of your accounts. Creditors prefer to see that your accounts were in existence for a long time. The older your accounts are, the more likely they are to have been used responsibly. Older accounts tend to have a lower average age, which can impact your credit score.
Timely payments
A credit score is only as good as the time you pay your bills. They are reported to the three major consumer credit bureaus on a monthly basis. Late payments can cause credit scores to drop by up to 180 points. So it is critical that you pay your debts on time.
Recent loan activity
Your credit score is influenced by your recent loan activity. A high number of new accounts and inquiries can hurt your score. The good news? You can change it. Review your credit reports and make the necessary changes. You may be able to open a credit card or obtain a small personal loans if you don’t have any revolving account. Also, ensure that you pay your bills on time. You'll see an increase in your score over time if it becomes a routine to make timely and responsible payments.
Soft inquiries
Your credit score can be affected by soft inquiries in several ways. Soft inquiries are performed when you apply for new credit cards. Soft inquiry will also be performed by insurance companies when you apply to for homeowners or auto coverage. While these inquiries may not be visible to others, they will be recorded on your report.