Your credit score is one of the most important measures of your creditworthiness. Your FICO® score is a three digit number ranging between 300 to 850 and is based on metrics developed by Fair Isaac Corporation. The higher your score is, the better — as the less risky you appear to banks and lenders. By understanding what impacts your credit score, you can take steps to improve it.
Your credit score is based on the following five factors:
- Payment history – 35%.
- Amount of money you owe – 30%.
- Length of credit history – 15%.
- New lines of credit – 10%.
- Types of credit lines – 10%.
80% of your credit score is determined by how long you’ve been making on-time payments and keeping your balance low.
Bottom line, don’t “max out credit cards.” Keep the balance low and pay bills on time.
To learn more about your credit score check out our podcast episode with Nikole Vialet where we discuss tactics to improve your credit score.