How Scores are broken down:
Types of Credit
New Credit Payment History
Length of Credit
Hints on improving score:
1) Payment History 35%
a) Pay your bills on time. If you slip up here and there it can hurt your score. However
a pattern of bad behavior is worse than an occasional slip up. 60%-65% of all credit
reports do not have any late payments.
b) If you miss a payment, get current and stay current. The longer you pay your bills on
time the better your score.
c) Be aware that paying off collection accounts will not remove them from you credit
report. They will stay on your report for seven years.
d) If you have trouble making ends meet, contact your creditors or see a legitimate
credit counselor. This won't improve score immediately, but if you can begin to
manage your credit and pay on time, your score will get better over time.
2) Amount owed 30%
a) Keep balances low on credit cards and other "revolving credit." High outstanding
debt relative to the amount of credit you have can affect score. You should keep you
credit balances at 20 to 30 percent of maximum.
b) Pay off debt rather than moving it around. The most effective way to improve score
in this area is by paying down your revolving credit. In fact, owing the same amount
but having fewer open accounts may lower your score.
c) Don't close unused credit cards as a short-term strategy to raise your score.
d) Don't open a number of new credit cards that you don't need, just to increase your
available credit. This approach can back fire and actually lower score.
3) Length of credit History 15%
a) If you have been managing credit for a short time, don't open a lot of new accounts
too rapidly. New accounts will lower your average account age, which will have a
larger effect on your score if you don't have a lot of other credit information. Also,
rapid account buildup can look risky if you are a new credit user.
b) When getting rid of credit cards it may be wise to keep your oldest card even if it has
a high interest rate, use it once a year and pay if off. Just to keep the history.
4) New Credit and inquires for new credit 10%
a) Do not open a several credit accounts in a short period of time, especially if you do
not have a long-established credit history.
b) FICO scores distinguish between a search for a single loan and a search for many
new credit lines, in part by the length of time over which inquiries occur.
c) Re-establish your credit history if you have had problems. Open new accounts
responsibly and paying them off on time will raise your score in the long run.
d) It's OK to request and check your own credit report. This won't affect your score, so
long as you order your credit report from the credit bureaus or through an
organization authorized to provide credit reports to consumers.
5) Types of credit 10%
a) Apply for and open new accounts only as needed. Don't open account just to have a
better mix of credit - it probably won't raise score
b) Have credit cards but manage them responsibly. In general, having credit cards and
installment loans (and paying them on time) will raise your score. Someone with no
credit cards, for example, tends to be higher risk than someone who has managed
credit cards responsibly.
c) The Credit mix usually won't be a key factor in determining score, but it will be more
important if your credit report does not have a lot of other information on which to
base a score.