Have you ever wondered what exactly is your credit score, how can I raise my credit score fast, or what can I do to rebuild credit? Well the first thing you need to do is learn what factors make up your score. In this article we’ll delve into what your credit score is made up of and how you can use what you learn here to improve your credit. Payment History The biggest impact on your credit score is your payment history. It makes up 35% of your score. What is payment history? Simply put, it’s how often you pay your bills on time, lates on credit cards, mortgage payments, or car loans will damage your score a great deal. What can you do to insure your payment history is clean? It’s pretty easy, make your payments on time. If you missed a couple of payments here and there don’t let it get you down, with time these late payments affect your score less and less. Debt Utilization ratio Debt utilization is how much credit you’re using. Say you have 3 credit cards that give you a total of $20,000 in credit, if your balance on these cards is $10,000 then you a debt utilization ratio is 50%. Mortgages and car loans are often not included in this ratio, only revolving credit such as credit cards and lines of credit. The lower the ratio the better. This accounts for 30% of your credit score. Of course the best way to raise your score if you have a high debt utilization ratio is to pay down your debt. How old your accounts are How old your accounts are, accounts for 15% of your credit score. The longer your credit card, car loan, or mortgage is the more your score will benefit. Older accounts show responsible borrowing habits to creditors and a ability to pay back borrowed funds. If your young and don’t have a lot of old accounts, don’t worry, just mange your debt wisely and your score will continue to increase. How often you apply for new credit If you apply for new credit cards and loans often it will hurt your score. This puts up a red flag to creditors that something might be wrong, since you are applying for a lot of new credit at the same time. If you’d like to apply for new credit cards we advice our customers to apply for all new credit in 30 day period so that it won’t have as an adverse effect on your credit as stretching the process out would. This factor makes up 10% of your score. Types of credit Your credit mix accounts for 10% of your credit score. Someone who has different types of credit will benefit the most. An ideal credit mix would look like, mortgage, car loan, credit cards. Don’t go out looking for new credit accounts if you don’t already have them. This is a minor detail, and even having a few credit cards will do your score good. So, your credit score is made up of the following factors. 35 percent: History of on-time or late payments of credit. 30 percent: Available credit on your open credit cards 15 percent: The age of your lines of credit (old = good) 10 percent: How often you apply for new credit. 10 percent: Variable factors, such as the types of open credit lines you have In order to rebuild your credit you must learn to manage your finances wisely. We hope this article has helped shed some light and taught you how you can raise your score with some work. if you have old charge off or collection accounts or even if you have a bankruptcy on your report, a credit repair company may be able to help you get back on track and get these items removed, we recommend visiting our site and learning about us and how we can help you.
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