What Affects the Credit Rating of the Borrower?


Having a good credit score is essential for borrowers to get approval on their loan requests from lenders. To ensure that lenders such as mortgage bankers and credit card companies will not reject your loan request, you need to check your credit score thoroughly before determining the loan amount you will likely receive along with its interest rates.

Here are some of the three biggest factors that affect your credit score:

1. Payment history

Your payment history is the most important factor that affects your credit score, because it shows cash lending company whether or not you can be trusted to take a loan and settle debts. Your payment history also show your ability to reimburse your bills on time without red flags and foreclosures. The later you are on payments to previous lenders, the worse your credit score is.

2. Amounts owed

Your FICO score, known as a type of credit score used by most lenders to evaluate your credit report, is used to find out how much debt you have in your accounts. With that in mind, it’s vital to be conscious of the amount of debts owed on specific types of accounts, including credit cards, auto loans, and installment loans. The less debt you have, the better your credit score is.

3. Length of credit history

Your overall credit score also depends on your credit age, and how long your accounts have been open and active. It would be great if you have a long credit history without any delinquencies related to past due payments and other debts. On the other hand, having a short credit history can be all right as well if you have paid your bills in full, and on time.

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