The Most Important Factors of Your Credit Score

Post By: Admin / USA Frugal Club

If you are either trying to maintain a good credit score or repair a lower credit score, it will be important to understand what factors are weighed the most heavily in your credit. This helps you realize what potential fixes are the most urgent. There are many things that people also assume are crucial factors in your credit score, but are not. Try to focus on these aspects the most. 

Diversity of Credit - 10%

Having a wide variety of accounts, including credit cards, credit lines, mortgages, and more is beneficial for your credit score. This will account for 10% of your overall credit score. Make sure to have many accounts, so long as you can handle them and not have them force you into debt. 

Hard Inquiries - 10%

Hard inquiries, as well as opening multiple sources of credit in a short period, works negatively against your credit score. This is because it implies you are going through a financial emergency. If you are applying for one credit card, it is best to wait a bit before pursuing a new one. 

The Extent of Your Credit History - 15%

Creditors need to see that you are dependable in paying off credit over a longer period. As a result, younger credit reports will not be as high typically as older accounts. There is nothing wrong with this, but just make sure to have a plan to build this aspect of your credit up with reliability on multiple sources of credit over time. 

Percentage of Available Credit - 30%

Many people assume that the amount of outstanding debt that you have is what affects your credit score, but this is false. What matters more is the amount of credit that is available within your accounts. If your credit cards are all full, chances are this is negatively impacting your credit score tremendously. 

Payment History - 35%

The single most important factor creditors look at is your ability to make payments on time. Unfortunately, making on-time payments will not send your score skyrocketing immediately either, as it does take time. However, missed payments can significantly harm your credit score. Your ability to show that you can effectively manage your multiple credit accounts is the most important factor in your credit score.