You can control many factors that affect your credit score. First of all, the length of your credit history is a very important factor. The more senior your accounts, the more lenders will trust that you can pay them back on time. Your credit score can be improved by repaying loans over a longer term.
Payment history
Your payment history is one of the most important factors that will determine your credit score. You can see a huge drop in your credit score if you don't make timely payments. Late payments are also recorded on your credit file for seven-years. Even if payments are only a few days late, it is crucial that you make your payments promptly.
Age of accounts
Credit scoring models take into account the average age of credit accounts. This information is used to calculate your overall credit score. However, age-related factors can affect your score in different ways depending on the scoring model and company you use.
Credit limit for age
Credit score can be affected according to the average age and balances of your accounts. Creditors like to see that your accounts have been in operation for some time. The more you use your accounts responsibly, the older they are. The average age of newer accounts is lower and can negatively impact your credit score.
On-time payments
It is important to make timely payments. These are sent to the three main consumer credit bureaus monthly. Late payments can lead to a 180 point drop in your credit score. It is important that you make your payments on time.
Recent loan activity
Your credit score depends on your past loan activity. You can lose your score if you have too many new accounts or inquiries. The good news is that you can do something about it. First, you need to go through your credit report and make any necessary adjustments. 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. Your score will improve over time if you make a habit of making prompt and responsible payments.
Soft inquiries
Soft inquiries affect your credit score in a few ways. When you apply for a new credit card, for example, the lender will perform a soft inquiry. In addition, insurance companies will do a soft inquiry if you apply for a homeowners or auto insurance policy. Although they may not be obvious to others, these inquiries will be recorded on your file.