Your Credit Score.
What it means and how you can improve it.
Did you know?
To a lender, your credit score represents your ability to pay back debt can affect your:
Approval for a loan or credit card
Even renting a home and employability
What does your score mean?
Credit Scores Range from 300-850:
Excellent Very Good Good Fair Poor Very Poor
800-850 750-800 700-750 650-700 600-650 300-600
What factors into your credit score:
35% Payment History
30% Debt owed
15% Length of Credit History
10% Type of accounts
10% Recent Credit Activity
Payment History: Make payments on time!
(- 35% of your score is based on payment history) - Be aware of when payments are due - Automate payments for bills to reduce risk of missing them - Stagger payments to avoid massive outflows
Reduce your debt load
- 30% of your score is determined by the amount of debt you owe. - Pay off your debt as quickly as possible. - Be mindful of your debt to credit ratio.
KEEP your oldest credit cards (Credit History, length)
- Many people's first instinct when trying to reduce credit is shred their old cards. - DONT! - Your credit history makes up 15% of your score and by cancelling your oldest accounts you are shortening your history! - The cards you have had the longest, with a good payment history, will help your score. - If you want to cut back, cancel non-bank cards first, such as department store credit cards, then focus on the cards you have had for the shortest amount of time.
(Recent Credit Activity) Be careful of excessive hard inquiries
- A hard inquiry is when you apply for credit and the lender checks your credit report before extending an offer. - This includes bank credit cards, retail credit cards, and loans. - One hard inquiry will not do much harm, but many in one year could have some serious affect on your score.
Follow these easy steps and you can improve your