Question

1- Number and describe at least five (5) factors that determine your credit score ?

2-Explain why having a strong credit score is critically important?

Answer 1

1)The factors that determine credit score are as follows:

a)Payment history:

It accounts for about 35% of your credit score for each of the scoring model.Your payment history is basically the record of whether you have paid your bills on time or not.

b)Amount of Debt :

It accounts for about 30% of your credit score. It is best to keep your credit utilization to 30% or less.But,keeeping it at or under 10% is even better.

c)Credit age or Credit History :

It affects 15% of overall score.The older your account the more that affects and help your credit score.

d)Account mix:

Credit mix accounts for 10% of your score.Your credit score is happiest when you have a good mix of both.

e)Credit Inquiries:

The two types of credit inquiries as soft inquiries and hard inquiries.

2)

If you have a good credit score, you'll almost always qualify for the best interest rates, and you'll pay lower finance charges on credit card balances and loans. The less money you pay in interest, the faster you'll pay off the debt and the more money you have for other expenses.

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