Time Factors with Credit

Even the time that you have had credit for will be a determining factor when your credit score is calculated.

This is affected by the number of loans you have and many other conditions however you can use, as an approximation, the figure of 15 percent for a guideline when determining your course of action to boost your score.

The reason this figure is quite high is simply because people who haven't had any, or have had very little credit, haven't given the credit bureaus enough information from their history to determine whether they will be a risk or not.

A person who has their first loan and has only had that loan for a short while, whether they have made the repayments on time or not doesn't have a track record and while they might be excellent candidates for lending they could also start defaulting on their repayments after the first few months.

You can see now why finance companies are reluctant to lend to such people and the only way that the person can improve their situation is to get more credit and build a favorable profile of their lending and debt repayment.

This is situation is quite easy to reverse as all you need to do is get a credit card or two and maybe a small loan or two and start paying them off on time and in full.
This will establish a favorable credit history for you and allow you to get bigger loans and also get those loans at better interest rates.

Even if you have had credit in the past but haven't had any recent history, this can also have a negative impact on your credit score, as the credit bureaus like to see that you have recent good financial management as a sign that you currently aren't a high risk.

Once again this can be addressed in the same manner as someone who has never had any credit by getting some smaller amounts and making sure you pay on time.

It can be better to keep accounts open even if you haven't been using them rather than closing them when you pay them off.