5 Factors that Influence Your Credit Score

What is a credit score? It is what that determines whether you can own a credit card, buy a house or take a loan. So, if a credit rating is so powerful, do you know what goes into making, or for that matter, breaking it? It will surely help you a great deal then to know the:

5 Factors that Influence Your Credit Score

1. Your Payment History

The payment history constitutes the biggest percentage of what that establish your credit rating. It includes everything from your mobile bill to your lease to loans like mobile home loans Canada . Whether you paid your previous credit line on time or if there was any late payment etc., is also taken into account. The payment rating is given from 0-9, with R1 awarded if you pay within 30 days, R2 when you are about 30-60 days late, R5 when 120 days late and so on. R9 is when your account is closed as a result of ‘non-payment’.

2. Utilization

It constitutes how close you are to your limit. Whether your credit limit is $500 or $5000, your credit score drops as close it gets to it.

3. Credit History

The longer you have had an account of say, a credit card or a line of credit and been paying their bills on time and without any late payments, the better your score will be.

4. Type of Credit

The type of credit can affect your credit score differently. While a mortgage will help you improve your rating due to the payments you make every month, a credit card limit can be exceeded any given day, risking your credit score instantly.

5. Credit Enquiry

Each time your credit score is checked, your rating is affected negatively. Although, this is indeed true, it may not be as bad as it sounds. When you go to several finance institutes, enquiring for a car loan, bad credit home equity loans Canada or a mortgage, your credit score drops that number of times but when you go to a broker, your score will be checked only once and the application sent to several banks by him, saving you from the problem.

It is always better to keep your payments in check and take the help of free credit reports if you feel your credit score is badly affected. However, even if your credit rating is poor, you can still opt for bad credit loans at low interest rates from reliable companies like FEL Canada to help you resolve your needs.

To know more, you can log on to Felcanada.com .