5 Factors That Decide Your Credit Score

With so much talk about credit crunches and lenders tightening their belts, knowing where you stand can give the edge in obtaining a mortgage, or fixing a problem before you apply for credit. 

Your credit score determines not only whether you will get credit, but can also influence your rate or whether you need to get a guarantor.

Credit scores range between 200 and 800. The higher your score, the more choice you will have with mortgage options and lenders. These factors will affect your score.

1. Your payment history. Whether you paid credit card obligations on time.
   
2. How much you owe. Owing a great deal of money on numerous accounts can indicate that you are overextended. 
   
3. The length of your credit history. In general, the longer the better.
   
4. How much new credit you have. New credit, either installment
   payments or new credit cards, are considered more risky, even if you pay promptly.

5. The types of credit you use. Generally, it’s desirable to have more than one type of credit—installment loans, credit cards, and a mortgage, for example.