What factors are personal credit scores based on? | iGuide

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What factors are credit scores based on?

This article explains the main factors that affect your personal credit score. Your credit score is determined by your payment history, current debt, length of credit history, types of credit used, and new credit requests. Understanding these factors can help you improve your credit score and manage your personal finances more effectively.

Currently, through the Credit Information Center (CIC), your credit score will be evaluated based on the following five factors:

Debt payment history (35%): This is the first factor and the decisive factor in the speed of application approval, and it also accounts for the highest percentage of the five factors that make up your credit score. Debt payment history is a number that reflects whether you pay your debt on time or not, and paying your debt on time is very important to the bank. Therefore, having a history of timely debt payment is the first advantage for you when borrowing.
Credit Debt (30%): This factor will account for 30% of your total credit score. Your credit debt reflects the total debt and credit debt ratio made up of all the loans that the bank has provided to you so far. If you want your loan application to be accepted, this ratio should be maintained at an average level.
Credit account opening time (10%): This is the time from when you opened your credit account to the present time. The longer the account opening time, the more your application will be evaluated by the banks.
Types of credit (10%): This factor reflects how many types of credit you own such as: credit cards, loans, etc.
New credit account (10%): This is the last factor in the factors that form your credit score. If you use a new credit account to borrow money, it will take a long time for banks to evaluate your credit card.

It can be said that personal credit score is an important factor for borrowers, banks and credit institutions. Therefore, you need to keep your credit score as high as possible, so that the approval process takes place quickly. Especially when borrowing in financial situations, you will receive a high limit and the best interest rate.