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5 Top Things That Could Impact Your Credit Card Score

Friday, May 7, 2021

 


A credit score is a measure of your ability to pay back the borrowed amount. This numerical representation of your creditworthiness is used by lenders and credit card issuers to decide to accept your loan or credit card applications. This score ranged between 300 and 850 and is calculated based on your credit history, number of open accounts, total debt, and repayment history among other factors.

 

Factors Affecting Your Credit Score

A credit score of above 700 is considered good by most lenders making you eligible for loans or credit cards at attractive terms. In many cases, your good credit score may make you eligible for a lifetime free credit card or credit card with additional features and benefits. Your credit score is an important factor helping banks to decide about enhancing your credit card limit or changing the interest rate or offering you a credit card with lounge access and other features.

Your credit score is calculated based on the following factors:

Payment History - Your track record of making your due payments on time is very important for determining your credit score. You can improve your credit score or ensure that it is above 700 by making all your payments including bills and other dues on time.

Even a single delay or miss can hurt your credit score. Similarly, any default on your old loans will lower your credit score. You must settle any such loan and get a clearance certificate that the loan has been closed. This will ensure that your credit score reflects the closure.

Total Amount Owed - The total amount borrowed by you is an important factor in determining your creditworthiness. If your total borrowings exceed 40% of the credit limit available to you, your credit score may be affected. You can keep your credit utilisation low by closing those credit cards that you do not use. Keep all your unused credit cards in a safe place and ensure that the due balance is zero.

Credit Report - Your credit report reflects all the loans or credit availed by you and your payment history. Any kind of discrepancy in this report can hurt your credit score so make it a point to regularly check it and ensure its correctness. A poor credit report can affect the interest rates charged by your credit card issuer or the lending bank.

Multiple Loan Enquiries - Did you know that every time you enquire about a loan or apply for a credit card, your credit score is affected. The greater the number of enquiries, the greater is the impact. So, if you are applying for an online credit card or a loan, do it after checking your eligibility and submit only one or two applications.

Types of Credit - You can have a good score by using a mix of credit options. You can choose to get a credit card that offers reward points to get good discounts and offers on air tickets and a personal loan to fund an expensive purchase.Your ability to handle various types of credit and pay them on time will have a positive impact on y our credit score.


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