Factors That Affect Your Credit

When it comes to discussing your credit rating, you may be wondering what affects your credit. How is your score determined in the first place? This is a common question and the truth is that many people don't know what factors affect their credit. For this reason, they could actually be doing things which harm their credit and not even know it.

Here are some things which will affect your credit:

• Credit history
• Necredit applications
• Outstanding debt
• Length of your credit history
• Types of accounts
• Stability

Each of these things can affect your credit in a different way. For example, your credit history will show whether or not you pay your bills on time, which is very important to a good credit score. If you pay any bill late, for any period of time, it is considered an indication of future non-payment of debt and will reflect poorly on your credit score. Paying your bills consistently on time will contribute to 35% of your credit score.

Many people have no idea how new credit applications will affect their credit score. Each time you apply for new credit, an inquiry is made on your credit report and this can affect your score in a negative way. The more open requests for credit that you have at a particular time, the higher the chance that it can reflect poorly on you. The more inquired for credit that you have, the less likely it will be that you can pay back these loans.

As most people will predict, outstanding debts will have a negative affect on your credit. The amount of money which you owe and the amounts of credit you have available to spend are very important in assessing your credit score. Outstanding debt will typically fall within different categories when assessing their affect on your credit. Samples include car loans, home mortgages, credit cards, home equity lines of credit and more. In addition to the types of outstanding debts, the total amount of credit available is also considered. The more credit you have, the higher a credit risk you are considered to be.

The length of your credit history is also taken into consideration when looking at your overall credit score. This helps determine how much information is available when determining your credit score. The more information there is, the more balanced and accurate the score will be. The longer you have had a particular line of credit, especially one with the same lending institution, the better it will look on your credit score.

The types of accounts which you hold are also important to your overall credit score and report. The mix of accounts is said to contribute to about 10% of your overall score. If you have a mix of different types of revolving credit, this is said to look more favorably on your credit report.