Your credit score is impacted by common factors such as:
Payment History: Your payment history contains all the information about how you have maintained the credit in the past. Chances of loan approval get reduced if you are having any missing, delayed or incomplete payments over your credit card and loan EMIs as it affects your score negatively.
Credit utilization ratio: The credit utilization ratio is calculated as the ratio of your borrowed amount with your total available credit. Having a credit utilization ratio greater than 40% indicates the burden of increased repayment that can negatively affect your score.
Credit mix: Having a variety of loans is also one more factor lenders consider. Maintaining a balanced mix of secured loans (car loans, 2-wheeler loans, and home loans) and unsecured loans (credit cards and personal loans) have a better positive impact on your credit score.
Credit Age: The age of your credit is calculated through the length of your credit history to check on how long you have been accessing credit. Having a longer experience in handling credit leads to better scores.
Hard inquiries: The prospective lenders access your credit report whenever you have applied for a credit card or a loan from the credit bureaus. It is reflected in your credit report as a “hard inquiry”. Hence, submitting multiple requests for credit within a short span has an adverse effect on your credit score.
