At first glance, many people disregard their credit score as just another number – until it comes time to apply for loans for cars or homes, apply for jobs or rent apartments. When major life purchases and milestones require borrowing money to fund them, having strong credit can mean approval or rejection and can influence interest rate charges accordingly.
There are multiple factors that contribute to determining your credit score. One is your payment history, which measures how regularly and reliably you pay back debts. Missed payments can have a devastating impact on your score for seven years after they appear on your report; an outstanding balance that goes to collections may compound that damage even further. Your credit utilization ratio also contributes significantly; lenders prefer seeing you keep this proportion as low as possible.
Length of Your Credit History (15%) And Credit Mix (10%) are other key components to your FICO or VantageScore score. Reducing how often you apply for new lines of credit – each inquiry counts as a hard pull that lowers your score slightly