You can control many factors that affect your credit score. The length of credit history is one of the most important factors. The more senior your accounts, the more lenders will trust that you can pay them back on time. A longer repayment term can increase your score.
Payment history
Your payment history plays a major role in determining your credit score. An inability to pay on time can lead to a significant drop in your credit score. Late payments are also recorded on your credit file for seven-years. It is important to pay your bills on time, even if it is only a few business days late.
Age of accounts
Credit scoring models evaluate the average age in your credit accounts. These information are used to determine 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 age
Credit scores can be affected depending on the age of your accounts. Creditors love to see evidence that your accounts are in good standing. The more you use your accounts responsibly, the older they are. Older accounts tend to have a lower average age, which can impact 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 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. Your credit score can be affected by too many inquiries and new accounts. There are ways to fix it. The first step is to review your credit report and make any necessary changes. 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 will see an improvement in your score if you have a consistent practice of paying on time and with responsibility.
Soft inquiries
Soft inquiries have a number of ways to affect your credit score. The lender will conduct a soft enquiry when you apply a new card. Soft inquiries may also be conducted by insurance companies if you apply to homeowners or auto insurance policies. Although they may not be obvious to others, these inquiries will be recorded on your file.