Your credit score is your access to loans. The higher the score, the better your chances of accessing these credit facilities. But you need to evaluate and keep track of the same. That way, you will know when to apply for loans.
Credit score calculation is a step in the right direction when evaluating your rating. You have to know how these rating companies develop your final score. That way, you will know what to improve and not to do.
Credit Score Calculation
Credit rating companies consider a few things. Below are some of the things they think when computing your score.
This fact about you plays a significant role in determining your score. It contributes to about 30% or more of the overall score. This check confirms whether you repay your debt in full or not. If not, your overall score will be significantly affected.
In most cases, people who never paid their outstanding will score dismally in this. Sadly, it affects even the other factors. Those with the least scores here tend to have the poorest credit rating.
Rating companies will also check for the total amount you owe debtors. This means consolidating all the loan amounts you have. That total amount will affect your ability to get other loans. The higher the number of non-performing loans you have, the lower your rating.
Length of credit history
Time is a factor when calculating interest earned for loans given out. The longer you hold the money, the more you pay in interest. Therefore, lenders would want long-term clients taking more significant amounts to earn them higher stakes.
Clients who have been borrowing for a long time and honoring their commitments are preferred by lenders. Besides, they tend to have higher ratings as they’ve proven to be people who keep their words by repaying loans on time.
Types of credit
The types of loans you take also impact your overall score. Some loans will reduce your score, while others will improve the score. That is why you must know the impact of a loan before signing that application form.
Improving your Credit score
After all is said and done, it is time to apply your knowledge about credit scores. Improving your credit score will take time and effort. For instance, it may take half a year to adjust your score accordingly.
Now, the trick is this. It takes less time for your score to read poorly than it takes to improve. That is why you’re trying as much not to let your score drop.
One of the best ways to keep a high score is to repay loans on time. This will significantly, slowly, but steadily improve your overall rating. That is why you should be keen not to have many troubled loans or late payments.
Work hard to increase your loan limits with lenders. That way, you will get higher loans, improving your score as you repay these loans on time.
There’s something you must never do if you want to retain a high credit score. You should never close your credit accounts. It is advised that you’d instead just stop the usage of a credit account rather than close it. That way, you’ll avoid hurting your credit report.
Sometimes, you do not have the time, patience, or opportunity to repair your credit score. Under such circumstances, you can utilize the credit repair company’s services. They will negotiate with the rating companies and get your score up again.
But you do not just sign up with any credit repair company. You have to do enough research and settle for Singapore’s best credit repair companies. These organizations will help you a lot to increase your score.
You have to check your credit score time and again. You will monitor when the rating improves or drops. That will make it easier for you to track your performance and improve. As a result, you will retain your ability to acquire higher loan amounts.