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Your Credit Score.
Your credit score fluctuates over time, but is a representation of the level of
risk you are to potential lenders. Each credit bureau calculates their scores slightly
differently, but the main two (Equifax and TransUnion), use a scale of 300 to 900.
The higher your score, the less of a risk you are to a potential lender. Each lender
has a specific score you must reach before they will lend you money. The lender
usually uses your score to decide the interest rate you will pay.
What can influence your credit score?
Various factors are taken into account from your credit report when using a mathematical
formula to calculate your credit score. These can include, but not limited to:
- You account payment history. Carrying a balance from month to month of missing payments
on your accounts.
- Anything in collections or recorded as part of bankruptcy.
- Outstanding debts. Are you close to the limit on a credit card?
- The length of your credit history. People arriving in the country will not have
a credit score yet.
- Recent inquiries made about your credit report. Lots of enquires brings your score
down.
- Your current credit mix. This could be that you only have credit cards, or a mix
of credit cards and personal loans.
The most important of these are your payment history, if you have ever been declared
bankrupt and the amount of outstanding credit. Other elements may appear on your
credit report like mortgage information and personal enquires, but they usually
do not effect your credit score.
Click here to go straight to credit report explained.
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