4 Factors That Affect Your Credit Score

Credit card score helps lender to know whether he is eligible for a particular credit loan, or any service. Service provider company asses credit file and give analyses to yield credit score. Financial advisors give advice as to how to use credit card and how can you reduce its use.

Credit Score

Score shows whether customers have a history of financial stability and responsible credit management. It ranges from 300 to 850, higher the score; good are the chances. Each agencies report slightly different score, but they make same conclusion of your credit history. There are many factors that affect a score.

Long credit line:

The history of your credits from the time since it has been active, affects the credit score. Creditors analyze your history to check whether you are good at maintaining your financial stature or not. If you do a transaction with a new but lower interest rate and close the account, it would affect your credit score negatively and lead to your credit card score degradation. For a creditor, it is easy to figure out your performance on a loan if there is a history of payments to analyze.

Credit inquiries:

You inquire various credit card companies, apply to them and this will lead to leave a negative impact on your credit card score. If you are planning to hand in a new car or any home appliance and need to finance, your inquires from credit companies will show up in your credit reports which is never a good sign for the vitality of a healthy credit card score. Your credit card company might also further dig into your credit history if your credit lines seem distorted. This shows your fragile economic condition and keeps creditors from putting their trust in you.

Your outstanding debt:

The most critical factors taken in consideration while computing your credit card score by the credit card company are; credit amount available and the credit amount currently being used. Your available credit amount increases every time you open a new credit line. Similarly, your available credit amount decreases when you close a credit line. So before closing and opening a credit line you must keep this in mind and keep an estimate idea of how would it impact your credit card score. The credit amount which is being used would not change on a broad range as this is just transferring the debt between two companies.

Credit limits:

You must always take care of your credit limits and keep checking the status of the amount that is available, calculate how much can be taken in use and at the same time a good credit card score can be maintained. If you utilize your credit limit completely, it will certainly affect your credit card score negatively. Unless there is urgency, do not let it go below 25 % of the credit limit if you want to keep a good credit card score.