There are 5 main factors that determine your FICO score:
Payment history. If your credit score was a pie, the biggest piece would belong to payment history. It accounts for 35% of your score. That means making on-time or late payments on all your credit accounts can really make or break you.
Payment history. If your credit score was a pie, the biggest piece would belong to payment history. It accounts for 35% of your score. That means making on-time or late payments on all your credit accounts can really make or break you.
Debt balance. The next piece is how much debt you owe -- it makes up 30% of your score. Credit companies really like people who use less than 30% of their available debt limit. That means if you’ve got three credit cards with a total credit line of $10,000, you don’t want to ever carry a balance of more than $3,000 at once.
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Length of credit history. 15% of your score is determined by how old your credit history is -- in general the older your accounts are, the better it is for your score. But even people who haven't been using credit long can have high scores, depending on how good the rest of their credit report is, according to FICO.
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New credit applications. Applying for new credit takes up 10% of the pie. If you apply for new credit every other month, that sends a red flag to credit bureaus.
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Length of credit history. 15% of your score is determined by how old your credit history is -- in general the older your accounts are, the better it is for your score. But even people who haven't been using credit long can have high scores, depending on how good the rest of their credit report is, according to FICO.
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New credit applications. Applying for new credit takes up 10% of the pie. If you apply for new credit every other month, that sends a red flag to credit bureaus.
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Types of credit. As for the types of credit you have, this constitutes another 10% of your score. It’s better to have low levels of revolving debt like credit cards and more kinds of non-revolving debt like a car loan or student debt. It just makes you look less risky.
Ty Laffoon
Ty Laffoon
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