Credit Scores - Fair Isaac Corporation (Page 3 of 5) in pdf

30% - Amounts Owed: This is the second most important factor of your credit score:

This is how much you’ve borrowed compared to the total amount of credit

available to you. The more of your available balances you have

borrowed, the lower the score.

Balances on accounts: Even if you pay off your credit card monthly, your

balance is reported to the credit bureau based on the date/time the record

is pulled. The creditor may not know if you pay off the balance.

The number of accounts that have balances.

The amounts owed on the different types of accounts are scored

differently. As an example, a mortgage loan would be scored differently

than a credit card or a ―big box‖ store loan.

Installment loan balances are compared to the original loan amounts. As

the loan balance goes down, it shows you’re able and willing to manage

and repay debt.

Score:

Pay off your credit card balances in full every month.

Don’t use more than half of your available credit limit on credit cards and

other revolving loans – even if you pay it off every month.

Pay attention to credit card limits – card companies can lower your credit

limit triggering over the limit fees.

Pay off debt instead of moving it around to different credit cards or lenders.

3) 15% - Length of Credit History: In general, the longer your credit history, the

better your credit score. Length of credit history factors include:

How long credit accounts have been established. In order to have a credit

score, your credit report must list at least one account that has been open

for six months or more.

The age of the oldest account, the age of your newest account, and the

average age of all your accounts combined.

How long it has been since you used your credit accounts.

Score:

If you’re young or don’t have a very long credit history, don’t open a lot of

new accounts too quickly. That can lower your average account age and

your credit score.

If you pay off a credit card, don’t close the account if it is an account you

have had for a while. If you only recently opened it, closing the account

may not have much effect.

Ask a family member with good credit if you could be an authorized user on

their credit card – that’s if their creditor reports authorized user data to the

credit bureaus. You could also ask to be added as a joint account holder.

Note there are risks with attaching your credit report to another person.

Secured credit cards can help build up a credit history but only if the

creditor reports to a Credit Reporting Bureau.

The better your financial track record, the better you can weather the

occasional late payment without greatly impacting your score.

Credit Scores - Fair Isaac Corporation Page 3