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Decoding Credit Scores: Understanding the 5 Key Components

Have you ever wondered what goes into calculating your credit score? Your credit score is a crucial financial metric that impacts your ability to access credit, secure loans, and achieve your financial goals. In this blog, we will demystify the concept of credit scores by breaking down the five key components that play a vital role in determining your creditworthiness. So, let's dive in and unravel the factors that shape your credit score.

  1. Payment History: The Foundation of Credit Scores

Your payment history is the most significant factor in determining your credit score. It accounts for approximately 35% of the score calculation. Lenders analyze whether you have consistently made payments on time, including credit card bills, loan installments, and other debts. Late payments, defaults, or accounts sent to collections can have a negative impact on your credit score.

To maintain a healthy credit score, it's crucial to make timely payments and prioritize meeting your financial...

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