Five Crucial Factors To A Credit Score

By Carol Bright

Credit scores are decisive aspects of our economic lives. Having a high score can guarantee that you will be able to get credit and enjoy a more favorable interest rate, while if you have a lower score you may not be able to acquire credit at all.

Credit scores are key but not very many people comprehend what is implicated in shaping a credit score. There is more to it than just paying your bills on time.

But payment history is the major percentage of a credit score at 35%. Paying your bills on time with no late payments is the best way to increase your credit score.

The next factor is the total you owe compared to the credit you have available. This counts for 30% of the score. You need to not use any more than 35% of the whole you have available or it will count against you. The more you borrow the worse your score.

Next is the time-span of credit history at 15%. The longer your accounts have been open, the better for your score. Use your older credit cards more often because the longer the credit history is the upper your credit score.

New credit including inquiries count for 10% of your score, do not request for credit unless it is definitely required because a negative mark that will last for 2 years will show on your credit for every inquiry. New credit also includes newly opened accounts.

The remaining 10% is the kind of credit that you use and have. Installment accounts with a clear-cut finish date are usually scored higher than revolving accounts that are changeable without an end date. Regular credit cards are also scored higher than department store cards.

That is all of the components of a strong credit score. As you can see you must pay your bills on time but it is also critical to ration the sum of credit that you use, shun applying for excessive credit and establish a stable credit history. - 31382

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