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Recyclers News Press
Your credit score, also known as FICO, is a score cal-
culated from your credit report. It’s an indicator of how
risky a borrower you are. Your credit score can range
anywhere from 300-850, and the higher the score, the
better. When you apply for a loan your credit score is
used by the lender to determine how much they will
lend and your interest rate. The more risky you seem,
the smaller the loan and the higher the interest rate.
Do you know your credit score?
There are 5 factors that contribute to the credit score
and knowing what they are will make it easier to in-
crease your credit score and creditworthiness. The
five factors include:
Payment History
- Are you paying your bills on time?
This accounts for about
35%
of the score.
Total Amount Owed
- According to Mint.com1, you
should strive to keep your score healthy by using less
than 30% of available credit across all your credit
cards. This factor accounts for
30%
of the score.
Length of Credit History
- This factor accounts for
15%
of the score. Getting an early start on building
good credit is essential.
New Credit
- Number of recently opened accounts
and credit inquires. This accounts for
10%
of the
score.
Types of Credit Used
- Car loan, mortgage, and
credit cards. This accounts for
10%
of the score.
A score above 760 means you have excellent credit.
Repairing or improving your credit score can take
time. Here are
3 Ways to Improve Your Credit Score
:
1. Check Your Credit Report
Check your credit report annually. Use sites like
to check credit report
once per year per credit bureau (there are three) for
free. Review credit report for errors and make sure
that the amounts owed are correct and that no late
payments incorrectly listed. Dispute any errors with
the credit bureau and reporting agency.
2. Set Up Payment Reminders
Paying your credit payments on time is a big contrib-
uting factors to credit score. Enroll in automatic pay-
ments for credit card and loan debts to have pay-
ments automatically debited.
3. Reduce the Amount of Debt You Owe
Credit score is also based on your debt ratio (i.e. how
much balance you have vs. your total credit limit), re-
ducing the amount owed can help increase credit
score. Develop a payment plan that makes additional
payments on the debt with the highest interest rate
first, while maintaining minimum payments on other
accounts.
Reference:
Know Your Credit Score
And how it was determined
