This article analyzes five important factors that affect your personal credit score. These factors include payment history, current debt, age of credit, types of credit used, and new credit inquiries. Understanding these factors will help you manage your credit score effectively, thereby improving your borrowing capacity and credit conditions.

1. Here are 5 basic factors that affect personal credit score:

Payment history (35%): Reflects the process of paying debts on time or late. A good and timely payment history will help improve credit score.
Credit debt as of the date of borrowing (30%): Total debt and debt ratio from all loans at the present time.
Credit account duration (15%): This is the period from when you opened your credit account to now. The bank will appreciate it if you keep your credit account active for a long time.
Credit type (10%): Considered on all the credits you own such as credit cards, consumer loans, unsecured loans, mortgage loans, etc.
New credit accounts (10%): The more new loans you have, the lower your credit score will be.

2. What is a good personal credit score?

CIC credit score ratings are classified into the following levels:

150 – 321: Very high risk, not eligible for loans.
322 – 430: High risk, unable to repay debt.
431 – 569: Medium risk, eligible for loan but high interest rate.
570 – 679: Low risk, ability to repay debt on time, eligible for loan, low interest rate.
680 – 750: Very low risk, eligible for loan, low interest rate and high loan limit approval.

Based on the above scale, the best credit score is 600 or higher, this is the group of customers who pay their debts on time, have low risk of debt collection. The group of customers with a credit score of 300 or lower are in the bad debt group, not considered for loan approval.

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