Adeyinka AdekanbiWhat Is a Credit Score?
A credit score is a number depicts a consumer’s creditworthiness i.e if your deserving of a loan, The higher the score, the better you look to potential lenders. Your credit score is based on your credit history: your total level of debt, repayment history and other factors. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner
Having a good credit score is key when trying to secure loans and other financial assistance. Many people actively spend time trying to build and improve their credit score t is very important most impacted by the following elements: Your payment history (35%), including whether you always pay bills on time or have had late or missed payments in the past.
You have a missing payment on your report
A single payment that is 30 days late or more can send your score plummeting because on-time payments are the biggest factor in your credit score. Worse, late payments stay on your credit report for up to seven years.
The impact of a payment mishap fades with time, though. Continuing to pile up a streak of on-time payments will help offset the damage, but recovery will take longer than with high credit utilization.
You have failed to stick to the credit agreement
If you make a late payment, miss a payment or pay less than is required by your credit agreement, it all gets added to your credit history. Over time, this could lead to your credit score being classified as ‘very poor’ or ‘poor’ by the credit reference agencies that determine how easily you can borrow money.
Having no credit history
Your credit rating will also be affected if you’ve never taken out a credit card or any kind of loan. In these instances, the credit reference agencies have no information to go on when deciding whether you will pay off any money you borrow in a reliable and timely manner.
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