You will have become aware of the phrases ‘credit rating’ or ‘credit score’ either from television adverts, media reports or from your own experiences. If however the latter condition does not apply to you then you may well be wondering exactly how your credit rating is worked out by the banks and lenders. This kind of rating is a very important part of the decision-making process that comes as part of the application you make for various loans for example. There are certainly a number of factors that come into play when you are having your score calculated and this includes details of things that have happened in the past as well as those are occurring at present.
What kind of score can you get?
The way that a credit rating is put together eventually leads to a number being calculated and this value will be between 300 and 850. There is no doubt how crucial your credit score is in determining whether you will be able to get the decision you need and it was brought in to simplify the process from the decision-maker’s point of view.
The details of the bills you have been required to pay in the past are an important factor in the calculation of a credit rating. Although it is certainly true that some of these will be deemed to be more important than others it will all count in your favour if you have managed to keep fully up-to-date with your bill payments. In actual fact, your payment history takes up a bigger percentage of your credit score’s criteria than any other condition. If you have been through bankruptcy in the past then this is something that sticks on your credit history and impacts upon your rating.
Credit history duration
The more time you have on your credit history then the more favourably it will be looked upon, if of course everything is in the state it should be. The reason why this counts in your favour is because the lenders want to see some evidence of your finances over a longer period of time in order to get a better picture of your credit behaviour.
Debt will naturally play a huge role in any financial arrangements that you try to make so it is vital that it is under control. You will have credit limits and if you are close to filling these limits then you will notice that your credit score has been impacted upon as a consequence.