The highest credit score is 850, which allows for the best interest rates and lower monthly payments.
What Makes Up the Credit Score?
- 35%=Payment history
- 30%=Available credit on revolving accounts (capacity)
- 15%=Length of credit
- 10%=Accumulation of debt
- 10%=Mix of credit
What Type of Actions Lower the Credit Score?
- Late or missing payments
- Using the entire amount of available credit on credit cards
- Closing credit cards out (which decreases capacity)
- Excessively applying for credit
- Opening numerous accounts in a short period of time
- Having more revolving loans in relation to installment loans
What Does Not Affect the Credit Score?
- Debt ratio
- Length of residence
- Length of employment
Approximate Credit Weight for Each Year:
- 40%=Current to 12 months
- 30%=13-24 months
- 20%=25-36 months
How To Improve the Credit Score:
- Lower credit card balances
- Do not close credit cards (which decreases capacity)
- Make payments on time
- Do not open numerous new credit card accounts
- Acquire a solid credit history with years of experience
- Move revolving debt into installment debt