Confused about the three digits that make up your credit score? You’re in luck! In this video, we’re uncovering the factors behind your credit score and explaining what each component means for your financial health.
To start, we will explore payment history, one of the largest factors in determining your score. Consistent, on-time payments on credit cards and loans enhance your score, while missed payments can lower it significantly, showcasing your overall financial reliability. Next, you’ll learn about credit utilisation, or how much credit you’re using relative to your limit. Keeping utilization below 30% could signal responsible credit use.
The longer your credit accounts remain active and responsibly managed, the more positively it impacts your score. We’ll also cover types of credit and their effect. A mix – such as credit cards, loans, and mortgages – suggests balanced credit management. But remember, new credit should be added only when necessary.
Finally, we’ll walk you through tips to be mindful of, such as new credit inquiries, opening new accounts, etc. Understanding these elements empowers you to manage your credit wisely.
Remember, your score isn’t fixed; it grows with your habits. By regularly checking your credit report and using credit responsibly, you’ll pave the way to better financial health.
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