09 Jan Factors Impacting Your Credit Score

The Credit Score Factors You Should Know

Have you ever been denied a loan because you don’t know how to fix a bad credit score? A credit score is crucial for lenders to trust you’ll pay back your loan, and has great power over your future financial freedom.

A credit score is integral in evaluating your financial integrity. It measures whether you’ll pay back borrowed money fully and on time.

Imagine a friend asks you to borrow a few thousand to pay his rent that month. You know they probably won’t pay you back, and you’ll need that money back again. Would you lend them your hard-earned cash? 

Probably not, right? They’d need to build your trust first. Banks, landlords, and lenders think about credit score factors the same way. 

This article discusses the 3 factors that build and break your credit and how Credit Boost helps fix bad credit.

3 Factors Affecting Your Credit Score

Missed payments impact your credit score.

Missed payments knock down your credit score more and more, depending on how large the debt is and how long ago you should have paid it back. 

Surprisingly, more recent missed payments worsen your credit more than older ones, since lenders prioritise your latest debt. 

Longer missed payments (3-6 months) turn into defaults, which have a much bigger impact on your credit. Defaults turn to judgments– when the court orders you to pay your debt.

The solution? Ensure consistent, on-time payments on all your credit accounts (loans, credit cards, etc.) to heighten credit and get professional help.

Large debt makes for bad credit.

Did you know the amount of debt you owe and use concerning your limit– called utilization ratio– can impact your credit score? 

The best way to remedy this is to keep your debt low and your utilization ratio below 30%. 

Make an effort to:

• Track your expenses.
• Pay more to reduce your outstanding balance.
• Avoid unnecessary spending.

Asking For Too Much Credit Too Quickly.

If you have children, (or in some cases, a spouse) chances are that the more they nag for something, the further inclined you are to answer no. Lenders are the same, becoming suspicious when asked for money too frequently. 

Remember: creditors don’t forget. Negative information in public records, such as bankruptcy or debt judgments decimates credit.

How To Keep Clean Credit

Diversify Your Credit Portfolio

The longer your relationship with accounts, the better. Building a rapport by creating a mixed bag of credit, like loans, accounts, and different cards over a long time shows that you are trustworthy. 

Get Professional Help

Credit Boost is here to help you live a debt-free life. We’re committed to helping you reach financial freedom. 

Get a free credit report from the best credit boost service in South Africa–- Credit Boost’s industry-recognized professionals are on your side.

The thought of fixing bad credit can be daunting, especially with large amounts of debt and unprotected assets. Luckily, Credit Boost offers a diverse set of financial services, from debt review to loans. 

Get help from Credit Boost experts!