Your credit score is the representation of how well you have dealt with your past credit activities. It is a three-digit number that ranges between 300 and 900. There are so many factors that affect your credit score and some of them are:

Your Payment History: This particular factor holds a major weightage in credit score calculation, hence it should not be ignored. It’s the track record of your repayment activities of your loan or credit card bills. Lenders see if you are consistent with your repayment which is also an indication of responsible credit behaviour that makes you a reliable customer. Hence, ensure that there are no defaults on your past loans and credit card bills.

Credit Utilisation Ratio: With a credit card being so convenient and giving awesome reward points, one might be tempted to overuse it. Every credit card is loaded with a certain credit limit only up to which you can use it. When you max out your credit limit often, it is an indication that you are always credit hungry. As this factor has a considerable weightage on your credit score, it is important you maintain a low credit utilisation ratio of below 30% to get a good credit score.

Multiple credit inquiries: When you apply for a loan, a hard enquiry is made by the lender to access your credit report to see whether or not you are creditworthy. This hard enquiry can have an impact on your credit score slightly. Hence, at times when you seek credit desperately from multiple lenders, multiple enquiries are made which can even negatively impact your credit score.

Credit Mix: Having a mixture of multiple credit types is a good factor that can help you in getting a good credit score. The lenders see whether you have the experience of handling various forms of credit which makes you a reliable customer. Hence, ensure you have the mix of both secured and unsecured credit.

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