Credit score is a number derived from mathematical algorithms, collected from various aspects in credit reports and other additional sources of information. A credit score is used as an indicator of the likelihood of an individual to repay his loan and the probability of the individual being bankrupt.
Credit score shorten credit decisions time and lower the cost.
Can be used to support internal risk management policies and lending procedures.
Credit scores can be used throughout the borrower's borrowing cycle, from the initial stage, the account management stage, to the collection stage.
Factors Affecting Your Credit Score:
1. Pattern of Utilization
- Refers to the amount of credit payable / used on accounts by individuals
2. Latest Credits
- The creditor may assume that you are overburdening yourself if you have a new credit facility in the near term.
- Consumers are encouraged to apply for new credits in moderation.
3. Data Arrears
- The presence of arrears on your credit account will reduce your scoring credit
4. Credit Account History
- Consumers with long credit histories are regarded as more attractive or more reliable borrowers than individuals with limited credit histories.
- Accounts with a timely payment history will help improve your credit rating.
- Account payments performance in 12 months (including bad accounts and closed accounts) displayed in the account status history in your credit report will be used for scoring calculations.
5. Available Credits
- Number of accounts available (open or active) for credit.
6. Application Activity
- Refers to the number of new applications contained in your credit report.
- Whenever a prospective creditor looks for your credit report in response to a new loan application, the application is placed in your document. Having too many requests shows the lender that you are trying to take out more loans and thereby increase your credit exposure.
- To keep your application low, try to limit the number of loan and credit card applications.
- Reviews on existing applications do not affect your score.