Key Factors in Your Credit Score
Your credit score is a three-digit number that represents your credit risk. Most credit scoring models, like FICO and VantageScore, use five main categories of information:
- Payment History (35%): Your record of on-time payments is the most important factor.
- Credit Utilization (30%): The amount of credit you're using compared to your total limits.
- Length of Credit History (15%): How long your accounts have been open and the age of your oldest account.
- Credit Mix (10%): The different types of credit you have (credit cards, installment loans, mortgages).
- New Credit (10%): How many new accounts you've opened recently and recent credit inquiries.
How to Improve Your Score
The fastest way to improve your score is usually by paying down high credit card balances to lower your utilization ratio and ensuring every single payment is made on time.