What are the factors effecting Credit score?Biggest factors that affect the credit score

Credit score is three digit number reflecting the individuals creditworthiness and how do they manage  debts.To avoid risk in lending money to borrowers this is used by banks and other financial firms.To maintain healthy financial base individuals must check the factors that may affect Credit score and ways to improve it.

Previous payments 

Your previous payments are now history and this will decide the credit score. Weight age of  payment history will be ranging  between 35% to 40% in total credit score .Always check these things that is loans installments and credit bills paid on time and card payment made till now. Persons credibility increases  when timely payments are made over a period of time and rewards are not shown or visible to the payee directly but when missed a single payment its too awkward situation.One should not fail payments using credit cards  has it will reduce credit score . If failed  payments ,the credit score will be reduced and to regain the level it will take 6 months.

Read More:What is CIBIL ?Importance of CIBIL Score if you apply for loan or Credit cards

Utilization ratio of credit

Credit utilization ratio analysis,measures the expenses on credit card to some percentage of total credit limit. Weight-age can vary for credit utilization ratio that is between 25% to 35%  in total credit score decision. Based on  individual income,employment details,credit exposure in total,other factors the maximum amount of credit where a bank is willing to extend is credit limit. Suppose if the credit limit of card is  4 lakh ,the lender doesn't mean to be happy that cardholder  spending the full amount every month. Credit card holders will spend this amount will be labelled as "Credit hungry" which in turn also effect credit score so there is limit of spending that is below 30% .Credit utilization ratio if low can have a positive impact on credit score too.

Credit Mix

 Personal loans and cards issued are unsecured which don't require any collateral security but home loan are secured loans as property itself is a collateral .By nature loans which are not secured are  more risk to banks .So lenders has to see unsecured and unsecured loans which is best for credit score and if only unsecured loans in their account history can become stagnant after some time period.

Hard Enquiry

Hard Inquiry

Hard enquiry means banks can check credit profile before approval of  loan application or credit card request. Enquiry are made to check the credit score and which is never mentioned in credit report of Individual. If you  apply loans and credit cards frequently and many enquirers recorder within months then it leads to credit hungry and further the rejection of application or request thus a negative impact .Hard enquiries are also considered as weight-age in credit score deciding and ensure us prevent  to apply many loans or credit cards frequently.

Credit Depth

Credit Depth: Some factors also considered in association of credit cards like  how long you are using credit cards.  Average age  of the card or all loans will be checked.The more credit history,the high credit score.So this is also one reason that individuals must not close older credit  card account .By closing the credit card or cancelling , the credit history will be effected leading to reduction in credit score for short period

Also Read:Best Tips to improve for approval of Credit card Online application