What Makes up a Credit Score
FICO scores are based on speciﬁc credit history, with
of inputs used to ﬁnd your score.
There are 5 main parts of your
Payment History : 35% of your
Payment history measures how you've paid on your debts.
Payment history is the largest part of your credit score
if you've recently missed
payments your creditors, it's
those missed payments will
continue, and may lead to default.
Payment history also measures how "severe" a
payment has been. An item in
collection is worse than an item
paid 30 days late.
Tips to improve : Make payments on
time, all the time -
even items in dispute. Pay the bill
and worry about refunds
Amounts Owed : 30% of your credit
Amounts owed measures how "maxed out" you are.
owed is the second-largest part of
your credit score because a
person that is maxed out has no
safety valve in the event of a
crisis. Amounts owed is not about
the dollar amount you're
borrowing - it's about the
dollar amount you're borrowing
relative to the amount available to
Tips to improve : Don't close out
"old" credit cards, and
don't lower your available credit
limits. Having access to
credit is good.
Improving Your Credit Score 2011 Trulia.com All Rights
Credit History Length: 15% of your credit score
Your credit history is your track record with respect to
credit. Credit history matters in
the FICO model because
"experienced users of
credit" are viewed differently from new users
of credit. Similar to the hiring
process for a job, the credit bureaus
want to see this isn't your ﬁrst
Tips to improve : Don't close cards
with "history". You need
them to show you're experienced
New Credit : 10% of your credit
Don't close "old", no-fee credit
cards when you're done with
them. Instead, use them
periodically, and pay your
balances in full. This builds
history and credit length.
This category accounts for your recent attempts to secure
new credit. In general, the more credit for which you've
applied, the more damage it will do
to your credit score. This is more true for credit
cards than for mortgage
applications. A consumer in search
of new credit cards is presumed to "need" more credit lines.
Tips to improve : When you shop for
a mortgage, multiple credit checks can count as a single credit inquiry,
protecting your credit score.
Types of Credit : 10% of your
The type of credit you carry matters and not all credit
types are the same. Installment loans such as mortgage loans
and student loans, for example, are
considered "better" than credit cards and charge cards. This is
installments loans eventually pay
down to zero. Consumer cards, by contrast, can only go up.
Tips to improve : Don't carry an
abundance of store charge cards. Interest rates are high and the FICO
model looks unfavorably upon them.
For More Information, Please Complete
* Indicates a Required Field.