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UNDERSTANDING YOUR CREDIT |
FICO Scores range from 375 to 900 points. Generally a score of 700-900 is considered excellent credit. Even though the exact formula for your credit score differs from person to person, we know some of the factors that go into your score.
According to Fair Isaac, the factors that make up the credit score are:
1. Payment History. This is the biggest factor and accounts for 35% of the score.
2. Total Debts. This accounts for 30% and includes all debts including mortgage, car and personal loans.
3. Credit History. The length of your credit history accounts for 15% of your score.
4. Type of Credit. The variety accounts for 10%. This includes credit cards, mortgages, installment loans, student loans and more.
5. New Credit. The amount of the new credit being sought makes up about 10% of the total.
How Can I Improve My Credit Score?
1. Correct Errors. You should get a copy of your credit report and make sure that all of the information on it is complete and correct.
2. Inquiries. Keep the number of inquiries to a minimum.
3. Close Unneeded Accounts. The less available credit that you have, the less risk you will pose to a potential lender or creditor.
4. Pay Off Credit Cards. This shows that you use credit wisely and aren't spreading yourself too thin.
5. Pay Credit Obligations On Time. The longer history that you have of responsibly using credit and paying on time, the better your score.
6. Satisfy Any Public Records(Such as Tax Liens or Judgements). |
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