Credit Score

A credit score is a numerical expression based on a statistical analysis of a person’s credit files, primarily to gauge the creditworthiness of that person. Lenders use it to assess the likelihood of a person repaying a loan.

Scores are calculated using a variety of factors, including payment history, the amount of debt a person owes, the length of their credit history, and the types of credit they have used.

The most important factor in a score is payment history. This accounts for 35% of your total. Lenders want to see that you have a history of timely payments. If you have any late payments, your score will be negatively affected.

The debt you owe is your second most important credit score factor. This accounts for 30%. Lenders want to see that you are using only a little of your available credit. If you have a high credit utilisation ratio, your score will be negatively affected.

The length of your credit history is the third most important factor in your credit score. This accounts for 15% of your score. Lenders want to see that you have a long history of using credit responsibly. Your score will be negatively affected if you have a short credit history.

Your credit type is the fourth most important factor in your credit score. This accounts for 10% of your score. Lenders want to see that you have various credit accounts, including revolving charges (like credit cards) and instalment loans (like car loans). If you only have one type of credit account, your score will be negatively affected.

You can improve your credit ranking by making your payments on time, keeping your debt low, and increasing the length of your credit history. You can also improve your score by getting a variety of credit accounts.

It is important to remember that your credit score is not set in stone. You can always improve it by managing your credit responsibly.