The good news is there are many things you can do to control how your credit score is calculated. The length of credit history is one of the most important factors. Lenders are more likely to trust you to repay your loans on time if your credit history is longer. Repaying your loans over a longer time period can help you improve your credit score.
Payment history
Your payment history is an important factor in determining credit score. Failure to make a payment on time can cause a big dip in your credit score. In addition, late payments can remain on credit reports for seven years. It is essential to make timely payments, even if you are only a few day late.
Age of accounts
Credit scoring models consider the average age and credit history of your credit accounts. They then use this information in determining your overall credit score. Age-related factors can have a different impact on your score depending on which scoring model and company it is.
Credit limit age
Credit score can be affected according to the average age and balances of your accounts. Creditors appreciate proof that your accounts are active for a while. The more age of your accounts the better. However, accounts that are younger tend to be less mature and can affect your credit score.
On-time payments
Payments made on time are a very important part of your credit score. They are reported to the three major consumer credit bureaus on a monthly basis. Late payments have the potential to lower your credit score by as much as 180 points, so making your payments on time is crucial.
Recent loan activity
Your credit score will be affected by the amount of recent loan activity. High numbers of inquiries or new accounts can damage your credit score. You can make changes. It is important to first review your credit history and make any necessary modifications. If you don’t have any credit cards or personal loans, it might be worth opening a new one. It is important to pay your bills on time. You'll see an increase in your score over time if it becomes a routine to make timely and responsible payments.
Soft inquiries
In a few ways, soft inquiries can impact your credit score. When you apply for a new credit card, for example, the lender will perform a soft inquiry. Soft inquiries may also be conducted by insurance companies if you apply to homeowners or auto insurance policies. Although they aren't visible to others these inquiries will be recorded in your report.