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What Goes Into Your Credit Score?

As children, scores we had to worry about were test scores in school and who won the dodge-ball game. Entering adulthood, we may not have test scores, but one we need to be very aware of is our credit score. Determination on whether we, as consumers, can purchase a car, a home, pretty much anything, will depend largely on our credit (FICO) score. As a business owner, it is equally important, in what bank/finance institutions will do to financially help our businesses. It’s a report to tell companies how likely you are to repay a debt.

Credit scores range (according to FICO) are as follows:

300-629 Bad credit

629-689 Fair credit

690-719: Good credit

720 and up: Excellent credit


Whether positive or negative, several factors are taken into consideration when it comes to your credit report.

Payment history is about 35% of a factor. This is self-explanatory but I’ll touch on it anyway. Skipping payments and late payments will obviously affect your credit score in a negative way. Once in a blue moon won’t hurt you but consistent issues with make it extremely difficult to attain capital in the future.


Owing money doesn’t hurt your credit, it builds it.  When your balances remain high and near your credit limit, however, you run into issues. A lender wants to be sure you manage your finances well and don’t overextend yourself. 30% of your credit score is decided by this.


Length of your credit history plays 15% part of your credit report. This isn’t to say that if you just started obtaining credit that your credit isn’t going to rate well. They will take all things into consideration. Keep in mind though, that if you opened a credit card 3 years ago and haven’t used it since, that doesn’t help your cause. They look at “active” accounts.


Speaking of length of time… let’s cover new credit. Again, new accounts won’t hurt you but your score will take into account if you’ve opened several accounts at the same time. They monitor your activity to see if you can handle both payments and the responsibility of your credit limits. This accounts for about 10% of your score.


Lastly, the credit mix is the final 10% deciding factor on your credit score. Simply having 3 credit cards doesn’t mean you will show a great credit score. Having a “mix” of loans, credit cards, retail accounts, etc. is helpful. Not to say you should open one of each, especially if you don’t intend on using them (or paying them). This isn’t vital to your score, but plays a bigger part particularly if your report doesn’t show much more to base your score on.


Be sure to keep a close eye on your credit score by doing regular check-ups. Not only will this keep you motivated to maintain good credit, but also will alert you if your identity has been tampered with. There are several credit reporting agencies for you to utilize. Do your homework and be sure it is a reputable agency like FICO, Experian, or TransUnion, among others.

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