Credit scores are calculated based on what credit you have. This is known as your "credit mix." You can have "good" credit, which refers to mortgages, or bad credit, which refers to high-interest credit cards and payday loans. The types of credit you have will affect your score, so it's crucial to understand the factors that will affect your score.
Credit history length
When it comes to credit scores, the length of credit history is a key factor. Credit scoring companies calculate this figure and it's the average age of all your credit cards. Your score will increase the longer you have had a good credit record. You don't need to have good credit if you have a poor credit history. By making timely payments and avoiding late payments, you can build a credit history.
The length of your credit history is one of the five major factors that impact your score. It's in the middle, between the age of accounts and the amount you have used of credit. However, it is important to remember that credit history can be as long as 10 years. People with good credit have an average score of 711 and having a longer credit record can help you keep a good score.
Payment history
Your payment history plays a significant role in determining your credit score. This score is used to make lending decisions by lenders. Your score will drop if you make late payments. In order to raise your score, make sure you pay your bills on time and in full.
Your payment history will show which accounts you are responsible for and when. This information contributes 35% to your credit score. Because it shows lenders how likely you will be to repay your debts, they prioritize your payment history. It is important to remember that late payments won't automatically lower your credit score. Positive payment history can be more important than late payments.
Credit utilization
Your credit utilization ratio is an important factor that can affect your credit score. It can indicate whether you are a high-spending individual or a low-risk customer. This can help increase your chances to get approved for a loan. A general rule is to limit the amount of credit you use on revolving funds to 30 percent. You should also pay off your balances every month. To get a better view of your credit utilization, you can access your credit score online.
Credit scores are affected by how much credit you use. Having a balance-free credit card may be one way to boost your score. Your credit utilization ratio can be affected if your credit card balance is high. Your score can be improved by paying your balances on a timely basis.
Credit utilization does not include collections
Credit utilization is an important component of your credit score. It is a measure of how well you manage credit. High credit utilization can hurt your score. Keeping your credit utilization below 30% is best. Credit utilization is affected by several factors. You might have too many loans or credit cards.
Consider your credit utilization and remember that credit card debt is a small part of your credit total. That means that you should not worry about collections if you are only using a small portion of your available credit. Even if you have many high-limit cards, your total utilization ratio should not exceed 30%. This will give you access to thousands of dollars worth of credit.
VantageScore
A VantageScore is determined by your payment history. This shows lenders that you can manage multiple types of credit responsibly. It will decrease your credit utilization, and improve your score. It's a smart idea to keep your oldest credit cards open and in good standing.
VantageScore considers several factors, such as payment history, debt types, and overall debt. Your payment history makes up approximately 35%, but your total debt is equally important. Credit utilization is also important. It's a good idea for balances to be 30% or less than your credit limit.