How’s Our Credit Score Percentage?

You should know that the better your credit score is, the simpler it will be to gain loans, credit cards & mortgages. It may be difficult for many people to know how a credit score is compiled. Here we will try to describe the factors in how you your credit score is calculated.

Are You A Late Payer?

This is what has the most inpact on your score. Payment history will make up 35% of your final credit rating. This will be placed on your credit rating file. When people pull your credit report they will see exactly how you pay your monthly bills. For a high score it is recommended to pay your monthly payments early. Some creditors will report you as a slow payer even if you are only a few days behind. This will definitely for sure reduce your credit rating considerably.

How Much Do You Owe?

This can make up 30% of your credit file and is known as your debt ratio. This is described by the debt you owe versus your credit limit. For example we could be in possession of a credit card with a spending limit of $500 and you owe $480 this is considered a very high debt ratio and could have a negative affect.

You should make an effort to reduce your credit card debt by 50% or lower, this will for sure give your credit score a huge boost. Just a tip - the credit bureaus do not distinguish whether you pay off your credit cards every month or just carry a balance so keep it under 50% of your credit line.

Have You Had Credit For Long?

The more time you have had credit, the better. Lenders want to see that you consistently over a long period of time pay your bills. This can account for 15% of the total of your credit report.

For a high credit rating don’t close paid off accounts. If you have a credit card that you have had for over five years, leave the account open. This for sure will increase your credit history and in turn increase your credit rating.

What Type of Debt do you have?

Whatever type your debt is, this will be responsible for 10% of your total credit score. There are different types of debts creditors will look for, they are loans, revolving credit & credit cards. The reason creditors score the difference is because loans and consumer financing have fixed monthly repayment plans.

If your credit report consists of only revolving credit, this will not help you. This is because lenders know that the monthly minimums will vary every month depending on how much you chose to spend.

Applied Recently For A Credit Card?

The high credit scorers have one thing in common, they apply for credit only a few times. This part makes up the last 10% of your credit score. Beware that every time you apply for credit, this will be held on your credit file for 2 years. If are getting ready to financing something, limit your credit checks as much as possible.

Consumers who are looking to purchase a car are good examples who can get into trouble in this area. When looking to buy a car you will probably allow a few card dealers creditors to run a credit check report at each one to obtain card financing, this will greatly lower you credit score as each credit report is run. Do not let anyone run a report until you are ready to sign on the dotted line.

This is how your credit score is figured. We hope, these tips will help you increase your credit score considerably. Your credit score total can be between 300 and 850. Obviously the higher the better for your credit rating.

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