Factor That Impact Credit Score

Factor That Impact Credit Score

Credit Usage

This is known by another name, credit utilization ratio which plays an important role in credit score calculation. By maintaining the ratio less than 30% you can keep your credit score up to the mark. Keep your trading skills up to mark and learn more about it. We can say that the balance kept should be as low as possible on the credit card since it will be good for the credit score. Credit usage is will have a notable impact on the credit score as FICO makes use of this to decide how responsibly you make use of credit.

If you want to keep your credit usage low you can do the following things:

  • Keep the balance in the credit card low.
  • In a month make more than one payments.
  • Keep your credit limit high.

Derogatory Marks

The list of derogatory marks is as follows:

  • Tax Liens
  • Collections
  • Bankruptcies
  • Debt settlement
  • Foreclosures
  • The judgment that is due in civil court regarding your report.

All the above-mentioned marks will impact in a negative manner on the credit score and they will stay on the report for seven year or 10 years and sometimes more than that. It is of high importance that everyone has a check of their credit report at least every year once.

It was found that one in every five customers had a fault on either one or multiple credit report according to the study done in 2012 by the Federal Trade Commission. Suppose you notice that there is some error or there is something wrong with your credit report you can hire people from credit repair services who will help in resolving the issue.

One can have a check on their credit report through a website that is free known as Annual Credit Report and here they need to have a check at least once every year on the following things:

  • Equifax credit report
  • TransUnion credit report
  • Experian credit report

There is also a credit monitoring service that you can purchase which will provide assistance and help the customers in protecting their identity and solve disputes.

Length of Credit History

It is important to have some sort of credit history if one wants to have a credit score. Having a credit history that is short will be unpleasant to the credit score, however, the only thing you can do is wait as there is no other way. If you want a good credit score, having a credit of five years to six years is advised, but if you have a credit of more than seven years it is outstanding.