It can be hard to calculate your score without understanding what your credit score actually consists of. To begin, everyone starts out with 300 points. The highest your score can go up to is 850 points. The 550 point difference is made up of 5 different categories: payment history, limit utilization, mix of accounts, age of accounts, and inquiries.
- Payment history
Payment history is a record of whether you’ve paid your bills on time or not. This accounts for about 35% of your credit score. A single late payment can drop your credit score up to 100 points! Also, the later you are the bigger the impact it has on your credit score. Some payments that impact credit score include: credit cards student loans, mortgage, car loans, and more.
- Credit utilization or revolving credit
Your credit utilization accounts for 30% of your credit score! It is calculated by comparing how much revolving credit you have vs how much you’ve used.
- Mix of accounts
Account mix refers to the different types of account being reported in your credit score. This accounts for about 10% of your total credit score. To keep this score up we recommend maintaining at least 3 different types of account i.e. credit cards, student loans, auto loans, and mortgage loans, etc.
- Age of accounts
Credit age affects 15% of your overall score and interest rates. For FICO, 12 years is considered an excellent age of credit history. Though everyone isn’t fortunate enough to have 12 years of good accounts there are things you can do. Unless you have a good reason to, avoid closing older accounts. Also, try not to open new accounts too quickly.
Though inquiries are thought to make up a large portion of your credit they only account for around 10% of your total score. Credit inquiries only impact your score for 12 months and come off of your report in 24 months.
Although there are different credit scoring models, your score does not have to be a mystery. Contact Millennium Financial Services today and start on the road to better credit understanding and a better credit score. Call now (833) 752-7334.
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