Question

Identify factors affecting an individual’s credit rating

Answer 1

Answer:

There are several factors affecting an individual's credit rating. Among those, some of the significant ones are given:

1. Payment history

2. Amounts owed

3. Credit mix and types

4. Length of credit history

5. Current credit

Explanation:

1. Payment history: It means within how many days or periods an individual has completed the payment. If the individual missed a bill by a couple of days, it would cause that person's credit rating.

2. Amounts owed: It means how much money the individual owes from the overall credit accounts. Specifically, the total loan amount.

3. Credit mix and types: If his loan includes student loans, mortgage loans, auto loans, etc., this credit mix will also increase the individual's credit rating.

4. Length of credit history: The age of the person's earliest credit account, age of his current account, the average age of the current account, and whether the individual has used that account.

5. Current credit: If the individual takes new loans very often, it will decrease his credit rating. Therefore, the person has to think twice before applying for credits.