The good news is there are many things you can do to control how your credit score is calculated. The length of credit history is one of the most important factors. Your credit history will determine how likely lenders are that you will repay them on time. Repaying your loans over a longer time period can help you improve your credit score.
Payment history
Your payment history is one the most important factors in determining how credit scores are determined. Failure to make a payment on time can cause a big dip in your credit score. Late payments will remain on your credit report up to seven years. It is important to pay your bills on time, even if it is only a few business days late.
Age of accounts
Credit scoring models consider the average age and credit history of your credit accounts. They then use this information in determining your overall credit score. Age-related factors can impact your score in different ways, depending on which scoring system you use and the company you use.
Credit limit age
Your credit score can be affected by the average age of your accounts. Creditors want to see proof that your accounts have been operating for some time. The more mature your accounts, the better chance they have been responsibly used. However, accounts that are younger tend to be less mature and can affect your credit score.
Payments made on time
Your credit score is largely dependent on timely payments. They are reported monthly to the three largest consumer credit bureaus. Late payments have the potential to lower your credit score by as much as 180 points, so making your payments on time is crucial.
Recent loan activity
Credit score is affected by recent loan activity. You can lose your score if you have too many new accounts or inquiries. It is possible to make a difference. You should first look at your credit report to make any necessary changes. You might open a new card, or get a small personal loan if your credit report isn't in order. It is important to pay your bills on time. You'll see an increase in your score over time if it becomes a routine to make timely and responsible payments.
Soft inquiries
There are several ways that soft inquiries can affect your credit score. When you apply for a new credit card, for example, the lender will perform a soft inquiry. If you apply for homeowners or auto insurance, an insurance company will also conduct a soft inquiry. Although they aren't visible to others these inquiries will be recorded in your report.