Taking loans is being normalized these days, due to which many people without experience in the financial side of things tend to take loans without knowing anything about it. This is very dangerous as there are many things that one takes care of while taking a loan from anyone. Some of these factors include the interest amount, some clauses attached, and many more.
Even if you take a loan, one thing that you must not forget is to repay it within a fixed time because if you do the latter, then it can cause some trouble for you. In case you are a Canadian citizen from Edmonton, Lloydminster or Alberta, there are high chances that you can find good debt Settlement Company that can help you settle your loan amount.
Factors that can affect your credit score are mentioned below:
1. Repayment History
As mentioned earlier, your credit score is proof of your creditworthiness. Due to this, if you default on paying back the loan amount, it will be portrayed negatively in your credit score. The more time you take to pay back the debt amount or the more you fail to pay back the debt amount, the more negative will be the effect on your credit score.
2. Debt Amount
Credit usage is the most critical aspect of your credit score. A ratio often represents credit usage. This ratio takes into account your total available credit and, out of that, the amount you are utilizing. For the best-case scenario, your credit utilization must be less than 30% of your total credit amount. If you are using more than 30% of your credit amount, then it can be a big turn-off for the creditors.
3. The length of your credit history
The credit utilization amount and the history of your credit usage can affect your credit score. If you have been using credit cards for a long time, you will have a long credit history. In that case, it will positively affect your credit score.
4. Types of credits on your credit report
Generally, there are two types of credit accounts: revolving accounts and installment loans. If you have both of them in your credit report, it will help you increase your credit score. Having both types of credit accounts on your credit reports shows that you can maintain different types of credits.
“If you don’t take good care of your credit, then your credit won’t take good care of you” is one of the best quotes that explain credit score. Cities like Calgary have many companies that provide loans to ordinary people. This increases the possibility of people who cannot pay back their money in time. Many companies have expertise in Bad Credit Help in Calgary, and one of those companies is credit 720.