Understanding Your Credit Score and Factors Affecting It

Credit scores are important factors that determine whether an individual is creditworthy or not. Based on the credit score, the loan providers decide whether the individual is eligible to borrow or not. The three-digit score is given to any individual based on their previous credit history, transactions, credit mix, and track record. Individuals with only a good credit score are eligible to borrow any kind of loan. Not only is the approval, but even the cost of the loan decided based on the credit score of the individual. The Experian credit score is dependent upon a couple of factors that impact the score completely. If you want to improve your credit score, you need to take care of a couple of factors as given below and do a credit score check free online

Payment

Payment is an important factor that calculates around 25% of the credit profile. Therefore, every single payment that you make against your credit account impacts your credit score either positively or negatively. It is very important to have a clean track record so that you are eligible to take any kind of loan at the time of need. You can always automate your payment option or set reminders so that you do not miss out on making the payment by the due date. It is applicable to both credit card bill payment as well as loan repayment. Therefore, it plays a significant role in determining your credit score.

Credit mix

The number of loans you currently have in your credit profile is referred to as your credit mix. It is the mix of credit accounts that you have at present. It includes all the credit accounts that have been active and closed in your credit profile. Credit accounts mean credit cards and loans. You need to have a good mix of credit, which means both secured and unsecured forms of loans. If you have an unsecured loan like a personal loan, you should always go for a secured loan like a home loan. Do not completely saturate your credit profile with only one kind of loan. It is important to have a good balance and a credit mix. Learn how to get a business loan.

Credit utilisation percentage

It is important to have the right credit utilisation ratio when you are trying to work on your credit score. The credit utilisation ratio is nothing but the ratio of the total credit limit offered to the individual and the credit limit that has been utilised by the individual. It is always important to keep your credit utilisation ratio balanced or below 30% in order to improve your credit score. The credit utilisation ratio is always an important factor that decides your credit score improvement or rejection.

Loan applications received

It is important that you stop applying for multiple loan applications when you don’t need them. You need to restrict yourself from applying for too many loans. Do not apply for a loan unnecessarily. It is important that you do not keep applying for multiple loan applications within a short span of time. When you continue to use the hard inquiry on your credit profile, it completely destroys your credit score. It is very important to make sure that you do not apply for multiple loan products.

Wrapping up

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Looking to apply for a personal loan but don’t know what is your credit score? Don’t worry as now you can check credit score for free at Clix Capital. visit : https://www.clix.capital/personal-loan/