Five Elements That Make Up Your Credit Score
Credit scores are comprised of five factors. Points are awarded for each component, and a high score is most favorable. Here’s the breakdown of what makes up your score.
PAYMENT HISTORY – 35% IMPACT
Paying off debts on time has the greatest positive impact on your credit score. Late payments, judgments and chargeoffs all have a negative impact. Delinquencies that have occurred in the lost two years carry more weight than older items.
OUTSTANDING CREDIT CARD BALANCES – 30% IMPACT
This factor marks the ratio between the amount owed and the remaining available credit. Ideally, the consumer should make on effort to keep balances as close to zero as possible, and definitely below 30 percent of the available credit limit.
CREDIT HISTORY – 15% IMPACT
This portion of the credit score indicates the length of time since a particular credit line was established. A seasoned borrower will always be stronger in this area.
TYPE OF CREDIT – 10% IMPACT
A mix of credit, such as on auto loan and a credit card, is more positive than a concentration of debt from only credit cards.
INQUIRIES – 10% IMPACT
This percentage of the credit score quantifies the number of inquiries made on a consumer’s credit within a twelve month period. Each new credit inquiry can deduct points from a credit score. Note that personal credit inquiries do not impact scores.