If you would like to improve your credit it is important to understand how your
credit score is determined. A credit score is a mathematical model to evaluate
information on a credit file. The data is grouped together in five categories as
35% Payment History
Having a good payment history reflects that you make payments on time and do not
miss payments on credit accounts. This is one of the most important items a lender
will look for.
The presence of adverse public records such as bankruptcy, judgments, liens,
collections, or delinquencies (past due items), as well as the severity of the
delinquency, the amounts past due, the time since the delinquencies or negative
items were reported, as well as the number of adverse items on the report are all
30% Amounts Owed:
This is a measurement of the amount you owe in proportion to the total credit limits
you have available. Someone who is closer to their maximum credit line is deemed a
higher risk for late payments than someone showing larger available credit limits.
15% Length of Credit History
The credit-scoring model considers your oldest account and the average age of all
your accounts. It is a good reflection on your credit report to have an account with a
10% New Credit
The number of recently opened accounts and the type of account can affect your
score. Also multiple credit inquiries can represent a greater risk.
The type of credit you have in use is considered, your mix of credit cards, mortgage
loans, installment loans and consumer finance accounts affect your credit score.
A credit score takes into consideration all of these categories to determine your
score. Remember your credit score is a consideration of both the positive and any
negative information in your credit.
Step 1 Credit has credit programs that can help you improve your credit, for more
information call today for a free consultation