What can affect my credit score?
Posted by Mords1944 on May 9th, 2020
Credit Report Score 101
When it comes to applying for home loans or many other types of credit accounts, your credit score can have a big impact on your ability to qualify for credit. For many people, it is not easy to understand what constitutes their credit score. There are several factors to your credit score, and knowing how each factor affects your score will give you a better understanding of how to manage your credit. If you manage your credit correctly, you will get the highest score possible, giving you the ability to qualify for financing like a car loan or mortgage.
What is NOT in your score?
First of all, there are certain factors that are not part of your credit score calculation. They include your information on employment, occupation, salary, race, color, sex, marital status and much more. Keep in mind that the only thing that goes into your score calculation is the actual credit information.
What can affect my score?
Your credit score is a snapshot of your current credit profile. The credit factors involved in calculating your score are amounts owed, payment history, length of credit history, types of credit used, and new credit.
This is obvious, but the payment history represents approximately 35% of your score. Missing a payment has a big impact on your credit score, so paying all credit accounts on time is crucial. If you are currently behind with any debt, you want to update those accounts as soon as possible. Credit bureaus place the highest weight on payment history in the last 24 months.
There are many people who pay their Shop Simplio Review debts on time and still have a low score because they have high balances on credit accounts like a credit card. The balances in the accounts represent approximately 30% of your credit score. To increase your score, you want to pay your credit card bills and keep balances as low as possible.
Length of credit history
Credit duration refers to how long an account has been open. The longer the account is open, the higher your score will be. The credit history represents approximately 15% of your score. This is why it is so important not to close any accounts, as this could lower your score, even if you never use the account. By closing the account, you will lose the history of that account when calculating your credit score.
Each time you open a new account, your score will decrease until the account begins to have a credit history. New accounts only account for about 10% of your score, so you won't see a big drop in your score on a new account, but opening multiple accounts at once will greatly affect your score. You should only open a new account if you really need it too.
Types of credit used
Having good credit accounts on your report is crucial. Avoid loans or financial company accounts that have 90-day or 12-month cash or equal accounts. Mortgage loans, installment loans, and revolving credit cards affect your score more favorably than the accounts of financial companies. This represents approximately 10% of your credit score.Also See: Credit Score, Payment History, Credit History, Credit Accounts, Score, History, Credit
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