Factors that Affect Credit Scores
Credit scores can be difficult to understand. These do not hold any of your personal information and there is not usually anything on them to state why your score is so low. However, there are a number of factors that affect your credit scores and they will not always be on your credit report.
The main factor on credit scores is age. This is something that you cannot do anything about; it is something that can only change over time. Younger people are considered more of a risk to lend to. Even if you are in a high paying job and are careful with your money, your credit scores can still be low due to being under 25. If you are in your 30s and still in school, you could still find that you have a high credit score.
Your marital status will also affect your credit scores. Being single will mean that you are less stable, which means that you are a high lending risk. Even if you have lived in the same house, that you own outright, you will still find that you have a lower score than someone in the same situation who is married and has children. By being married or having a joint account, you will have more money going in so will be considered as a lower risk and so have high credit scores.
Having children will affect credit scores and not in a good way. The problem with children is that they are financial connected to you and you will have to provide for them. As children move out, you should look at keeping your finances away from theirs to protect your credit scores. This can be difficult at times, especially if you have helped them to gain a credit card, but is definitely something that can help you.
Defaulted payments, CCJs and bankruptcy filings will also affect credit scores. These will force your credit scores to lower because you will be considered as a higher risk than someone without any of these. There will be no notes on credit scores to state why these have occurred or on the length of time that they will have been there. You may be in the last month of the bankruptcy appearing on your report but because it is there, your score will remain low.
Credit cards and loans will also affect credit scores. Simply having a credit card or loan can help or hinder your score; not having one is sure to hinder your score. By having a loan and paying all of the monthly repayments on time, you can show that you can be trusted with borrowing money; the same applies for a credit card. Without these, there is no record of what you are like with borrowing money. However, if you default on your payments, you will suffer the consequences.
There are a number of factors affecting credit scores and you will need to look into them if you want to improve yours. Take some time to work out how you can improve your score and what is impossible to currently change.