Understand the different factors that make up your credit score!
Knowledge is key! Often times people just believe paying off an old debt will do the trick. It’s more than just that.
- 35% Payment history- defines how you have made your payments over time. One late payment can drop your score up to 100 points. It is so important to make all of your payments on time or talk to the creditor to set up a payment arrangement if you fall behind.
2. 30% Amounts owed- is the amount of outstanding debt that you currently owe. You want to spend 30% or less on your credit card. If you have a card with a limit of $300. You should not spend more than $90. The higher the rate the lower the score.
3. 15% length of credit- the length of time you have had credit established in your name. The longer a line of credit is being reported the better it is for the score.
4. 10% inquiries- When you apply for credit cards or anything that runs your 9-digit social security number they pull your credit to get your credit snapshot. You do not want to have more than 3 inquiries on your credit in a 12-month time.
5.10% types of credit- lenders want to see you can manage credit, so you want to have a mix of revolving and instalment loans. This is like a car loan and a credit card.
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