Credit utilization (30%) – How much of your credit limit you use if it is higher than 30% it can lower your score.Payment history (35%) – Paying your credit bills on time improves your score, while delayed, missed, or defaulted payments will lower it.New credit inquiries (10%) – Numerous requests for credit, especially during a short period of time, can lower your score.Ĭredit mix (10%) – It is recommended to have a mix of both unsecured loans and secured loans. Length of credit history (15%) – Older accounts and credit cards display consistently responsible credit behaviour. Payment history (35%) – Paying your credit bills on time improves your score, while delayed, missed, or defaulted payments will lower it.Ĭredit utilization (30%) – How much of your credit limit you use if it is higher than 30% it can lower your score. Each of them has a different weightage on your credit score as follows: You have displayed excellent financial management, regular credit payments, low credit utilisation, and exemplary credit history, You will be considered a very low risk for lenders, Banks and lending institutions will give you the best rates and favourable terms on loans and credit cards.Ĭredit scores are calculated by an algorithm that uses a number of factors. You have regular credit payments, a long credit history, responsible repayment behaviour, You will be considered a low risk for lenders, Lenders will likely be approved for credit, and get good deals on loans. ![]() You have a history of good repayment behaviour in the past, You will be considered a lower risk of defaulting, Most lenders may approve your credit, but you might not get the best rates You may have some irregular or late payment of credit card bills/EMIs or multiple credit inquiries, You might be considered a risk for lenders, Many lenders may not approve your loans those who do will likely have higher interest rates and down payments You might have numerous missed payments or defaults on credit card bills or EMIs, or poor credit utilisation, or a high number of credit enquiries, You will be considered a high risk by lenders of defaulting on your loans, Lenders might not approve your loans or credit applications. You have not used a credit card, and/or never taken a loan.
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