What Decides Your Credit Score?

A credit score signifies your creditworthiness and is found in credit report that you can obtain from CIBIL, Equifax or Experian. Today, your credit score hold a lot of importance when banks consider you as a candidate for credit card or loan application. A bad credit score often means your loan and credit card application will get rejected.

Here are factors that affect your credit score:

  • Credit History: Your credit history tells about type of credit you avail and how you treat those. It talks about past dues, clearances, payments you have done to build a credit score. If you delay in payments it provides an insight into defaulting nature you posses for credit.
  • Repayment Status: Like overall credit history, a repayment status specifically deals with timely payments on bills or interests, reflecting your ability for repaying amounts. Any delay in payments will hurt your credit score.
  • Credit Applications: It accounts for number of applications you make to avail credit, which is reflected in your credit report. Too many requests for credit at a time will showcase your credit hungry behaviour and affect your score negatively.
  • Type of Debt: You can either take a secured or unsecured loan. It is safe to take a mix of these both to energize your credit score. Depending only on unsecured loans can bring down your credit score.
  • Credit Amount: Sometimes you may be lured to spend more than credit limit or greater than your expending ability. However, excessive borrowing will indicate to lenders that you are irresponsible with your finances and the banks may reject your loan application based on such details.