What Determines A Credit Score?

credit score

Credit scores can be hard to figure out. They seem like this vague number, yet they have a large control over the things that happen in our lives. They can keep us from getting loans, a home, or even a mobile phone contract. You may know what your credit score is, but have no idea how it got to be that way. If this is you, we are here to help. Below are some of the factors that can play into a credit score.

  • Length – First, your credit score depends large in part on how long you have been actively using credit. If you just got your first credit card, for example, you will probably have a bad credit rating. On the other hand, if you have been practicing good credit habits for many years, your score will probably be higher. Sometimes all it takes is waiting for your score to go up.
  • Credit Cards – The next biggest factor is how well you manage your credit cards. Your credit score is supposed to be a numerical representation of how responsible you are with money, and each time you use your credit card, it is like taking out a mini loan. This is why your credit cards are so important towards your credit score. Make sure that you are paying off the balances each month, using the cards frequently, but not too often, and that you are keeping some of your older cards open (for the length reasoning mentioned above).
  • Debt – If you owe a lot of money, it will look back on your credit score. Things like student loans, mortgages, and credit card debt will all factor into your credit rating. While paying back debt can be difficult, you should really make it a priority if you want to raise your credit rating. Until you do, your credit score is going to continue to suffer.
  • Payment Times – Lastly, there is how promptly you make your payments, on anything from your bills to your credit card. If you consistently miss payments, it is going to drag your score down. On the other hand, if you have never missed payment, you will most likely have a very high score. Set up reminders for yourself when your payments are due so that you never miss another one. Your credit score will thank you.

As you can see, there are several factors that can determine your credit score. There is no one specific thing that will determine your score, and each thing will either raise or lower your number. Each person is different, and each factor will impact your score differently than others. If you are having trouble understanding your credit score, or why it is what it is, there are professional services out there that would be happy to assist you. You may not want to spend the money, but your credit score is such an important number, that it is really essential that you understand it fully. Hopefully we were able to shed at least a little bit of light on it so that you can work towards always having a good credit score.

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