Calulating Credit Score

The secrets behind your credit score: how it`s calculated, and tips on increasing your score. 1) Past Payment History - makes up over 1/3 of your score The report keeps track of 30, 60, and 90 day late payments. The more recent the tardiness, the bigger the deduction in your score and a history of late payments on several accounts will affect you more than late payments on one. 2) Amounts Owed - makes up about another 1/3 of your score Compares your overall indebtedness vs. available credit limits. The closer you are to "maxing out" your credit, the lower the score or if you have too much available credit vs. your income - this could lower your score. 3) Length of Credit History - accounts for 15% of your score The longer you leave accounts open, and somewhat active, the better your score. Don`t open a lot of new credit accounts at once, the new accounts will lower your "average account age" 4) Amount of New Credit - 10% of your score Each new application creates a new inquiry on your report - some lenders may think your planning a spending spree if you have multiple inquiries in a short period of time. However, new credit for mortgages or autos tend not to affect your score if made within a concentrated period of time - within 2-3 weeks 5) Types of Credit - 10% Installment Loans, Lines of Credit and credit card/retail accounts Your use, or overuse, of these accounts will affect your score. It`s not necessary to have different types of outstanding credit, and if you occasionally shift debt from a higher interest rate card to a lower interest rate card, you shouldn`t see much, if any, impact.