A FICO score ranges from 300-850 and is an algorithm to determine the likelihood that someone may default on a loan. Here is a breakdown of how it works:
15% of your credit score is based on the average length of time you have had credit. Whether you have credit or not, opening a credit card will start establishing you credit history. Don’t delay any more especially if you have no credit cards - take the first step to establish new credit NOW.
30% of your FICO score is based upon what your current balances vs. credit limits. To have the best score possible try to keep your balances below 30% ($300 balance on a $1000 limit card) or try to spread your balances between multiple cards and credit lines.
35% is based upon payment history. Were you 30 days late a few times just because you failed to remember payment due date? These are things that can haunt you for 7 years and control the largest portion of your credit score. Collections & judgments are much worse and severely impact credit scores.
10% is from your mix of credit. Banks and lending institutions like to see that someone is used to making consistent monthly payments like a car payment or mortgage, not just cards.
10% of your score is new accounts or inquires for new accounts. It becomes a red flag to the credit bureaus if someone suddenly needs 10 or 15 new lines of credit; they begin to think you are looking to float money between accounts because you may not be able to pay your bills.
By understanding these simple aspects of how your FICO score works, you can manipulate your score up as much as possible & ensure that you continuously improve your credit, rather than compromise it.
#FicoScore #CreditRestoration #CreditEducation