What can affect my credit score?

Settling credit: Still a very relevant topic!

Your credit history is considered by lenders to be an important indicator of your 'financial health'. When it comes to borrowing, having a good credit history can make all the difference between lenders agreeing to give you a loan (or any other type of credit) and refusing - so it's important to know how to protect it.

Here we'll look at what your credit score is and what kind of things can affect it.

What is my credit score?

Before they agree to any application for credit (whether it's a personal loan, credit card or any other line of credit), lenders will want to assess how much risk they'd be taking if they lent you money.

So they will want to look at your credit report (also known as your credit file), which will show them how you've managed your finances in the past. This will help them decide whether to give you credit or not - and how much interest they should charge you if they do.

If you find your credit score isn't as good as it could be, it's important to look at improving it right away. However, it's equally important to understand some of the ways you can damage your credit score, tohelp you avoid making similar mistakes in the future.

The things that can damage your credit score include:

Making late payments

If you fail to make your debt repayments on time, it could have a negative effect on your credit score. Your payment history is an important part of your general credit history, so try to make all repayments on time in order to help protect it.

Missing payments completely

If you fail to make your debt repayments completely, not only can you damage your credit score, but you could end up facing other serious consequences as well - such as fines and even legal action - as lenders try to recover what you owe them. If you're missing your payments it can be a sign you're struggling with your finances, in which case it's important to get professional debt advice as soon as you can.

Entering certain debt solutions

Certain debt solutions, whilst helping you repay your debts, can also damage your credit rating, as it shows you weren't able to keep up with your repayments as you had originally agreed. For example, anIVA (Individual Voluntary Arrangement) will remain on your credit history for six years - which can affect your ability to get credit during this time.

Take good care of your credit and remember to monitor it periodically, free credit score check online is available, usually with a little bit of searching.

Comments

[Mike W.]

Really interesting post. I never really thought about how I actually use my credit. I usually just reach into my pockets and pay with whatever feels the most convenient.

[Jackie]

Boy there's a huge list of things that can affect your credit score, both positively and negatively. I've found the best bet is to just be financially responsible, and let my score take care of itself.