How to fix your credit score.
How to keep from having bad credit.
Understanding exactly what goes into your FICO score, or credit score, can help you clean up your credit or, at the very least, avoid getting bad credit. Keep in mind that lenders are not the only people who may look at your credit score. Employers and even landlords will typically check a credit score for stability and trustworthiness.
The first thing that is included in your FICO score is your payment history. This one item alone accounts for more than a third of your overall score. This is why it is vitally important that you always make your payments on time. Your payment history can include your mortgage, credit cards, car payments, student loans, medical bills, and even rent if your property owner reports these things.
How much debt you have incurred is also included and makes up thirty percent of your overall score. The outstanding debt that you have on your mortgage, automobile loans, credit cards, and payday loans are all listed in this category.
The length of your credit history makes up another fifteen percent of your credit score. The longer your credit history, the higher your FICO score will typically be.
Credit inquiries and opening new accounts are also one of the reasons that people need to fix their credit. Those make up ten percent of the overall credit score. Each time that you apply for bank loans, automobile loans, credit cards, store cards, or any other avenue of borrowing money, you potentially lose points off your score. If you do not absolutely have to apply for more credit, then you are better off leaving it alone. There's no reason to apply for every store card in the world just for a small discount. Similarly, opening new credit cards, taking out new auto loans, and opening new home equity loans might also harm your credit.
Finally, the last ten percent of your overall FICO score is made up of the type of debt that you have. Mortgages are viewed differently than credit card debt. Medical bills are also viewed differently. Each type of debt you have, and the amount of that outstanding debt, makes a difference in your overall credit score.
If you need to learn how to fix your credit score, there are many resources available for you. The key is knowing what goes into your overall score and ensuring that you always know what your credit report looks like. Make your payments on time and avoid applying for unneeded credit. This also helps you avoid having bad credit in the future.
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