What is a credit score?

A credit score is a three-digit number that ranges from 300 to 900. It depicts the summary of your credit history and your creditworthiness. A good credit score is nearer to 900. Generally, a credit score above 750 is considered good and credit can also be availed easily by maintaining this score.

A study has reported that 6 out of 10 millennials who apply for a loan may be short-term or long-term get rejected for reasons that might be imminent to them or might not be known to them.

Prominent factors that Affect the Credit Score


The repayment history is one of the most important factors that affect the credit score. If any defaults are made while repayment by the borrower, the lender reports the same to the credit bureaus and thus the credit score is affected and it generally decreases with every default.

Utilization of Credit

The most common mistake one makes while using credit cards or loans is that they utilize the maximum credit that is available to them. Ideally, the maximum credit one must utilize is only 30% of the total credit that is offered to them. This can help to better the credit score and help in getting more credit in the future.

Credit Age 

The term credit age refers to the number of years since the first credit is availed by the borrower. Thus, the longer the credit age and history, the better the credit score of the borrower. The number of years in the credit industry signifies that the borrower is creditworthy and the next lender can provide them credit easily.

Credit Mix

The right credit mix is required to get a good credit score. Long-term, as well as short-term debts, should be a part of the credit mix so that the creditworthiness is enhanced and the score is also improved.

Also Read: Credit Health Report

Some of the unnoticed factors are

Errors of Identity

In some cases the errors happen because of clerical mistakes and a lot of these are now obsolete as the technology is getting updated and the world is moving towards automation. Though in some cases due to common mistakes like mis-spelling names, writing wrong numbers etc. these errors occur and due to these the credit score might be affected as they prove to be wrong information that is entered by the individual. The credit bureaus will take action against it and it will be affected and reported in the credit score.

Accounting Errors

In some cases, the accounts related errors occur. In these types of errors, the account-related information is either wrong or is entered wrongly by the individual. These types of errors are serious and they hamper your credit score in a major way. One way to make sure that these errors do not occur is to check and verify your credit report within short intervals of time. The errors can be screened at the earliest and then rectified by the individual. 

If any accounts are closed then this information should be entered into the credit report without any delay by the individual.

Sometimes, debts are also listed more than once by the individuals. In this case, the credit rating is downgraded and the score has a negative impact.

Factors that Should be Avoided for a Good  Credit Score

  • Whenever an application is filled by the borrower for the requirement of credit or a loan, the credit agencies will have an enquiry and get information from the bureaus. This enquiry is called the hard enquiry wherein the credit agency will source information from the bureaus.
  • If you ask your lender to frequently increase the credit limit for some purposes, the lender will be under the impression that you are credit hungry and it will reflect on your credit report. Thus, asking for too much credit very frequently should be avoided.
  • If new accounts are being opened very often, then also it does not reflect very well on the credit score. The credit score will tend to decline if accounts are changed very often.

How to Improve Credit Score

If you want to improve your credit score and make it at least more than 700 then these points can be helpful

  • Ensure that the loan is repaid on time and every time the same consistency is followed for every payment.
  • Check and verify the information in your credit report. Any incorrect information might affect the score negatively.
  • Avoid too many applications for availing credit
  • If multiple EMIs are to be paid, spread them out for the whole month
  • It is beneficial to pay credit card bills and loan installments using autopay as the installment will be deducted by the bank and no credit defaults will be seen
  • The credit utilization ratio should be minimum and as per the requirements of the budget for spending
  • A secured loan should be preferred over an unsecured loan as it is safer and the credit history will also reflect it positively.
  • Retaining old accounts will help in maintaining a good credit score as the retained accounts reflect the fact that the borrower is consistent with the payments and is also following the schedules for the payment of the loan
  • If you want a good credit score then, the lender should believe the fact that the borrower will be able to repay the loan and there will not be bad debts in any case.

Also Read: Credit Improvement Services


A good credit score will always help you to avail credit easily and at any time that you want. The factors that affect your credit scores such as the repayment history, the utilization ratio and the credit age should be evaluated thoroughly. The complete credit behavior and the pattern are described in the credit report and thus it should be dealt with care and be updated with the latest information of the borrower. The credit bureaus will reflect these points positively in your report.

FAQS of Unnoticed errors and discrepancies that are affecting your credit score

1:Two important factors affecting credit scores?

The two most important factors are 

  • Repayment schedule
  • Credit history

2:When will you get a negative credit score?

When the borrower does not repay they will have a decline in their credit score. The given factors will give a borrower a negative score

  • Bankruptcy
  • Uncleared dues
  • History of defaults in payments