Do you know what constitutes your Credit Score?

Are you bewildered by your credit score? Are you wondering how to increase your score or why your score has taken a nosedive? Do you want to learn what makes up your credit score to make better financial decisions?

Payment History

When it comes to your reliability with credit, your past payment history counts for a whopping 35 percent. If you are late paying bills, installment loans, or mortgage loans, you might want to reconsider your ways. Missing payments, better known as delinquencies, can also lower your score. 

Credit Utilization

Resist the urge to max out your credit cards. Credit card utilization – the ratio between your credit card balance to the available credit – constitutes 30 percent of your credit score. The smaller that percentage is, the higher your credit score will be. Aim to be at least 30 percent below your credit limit for a higher credit score. Better yet, keep your balance close to zero.

Length of Credit History

The length of credit history makes up 15 percent of most credit scores. Not closing old accounts is essential in trying to boost your score. The more years of credit history you have, the higher your credit score will be.

Mix of Accounts

When it comes to credit accounts, diversity is best. Having a mix of accounts constitutes 10 percent of your credit score. A combination of accounts (which can include credit cards, student loans, automobile loans, and mortgages) is superior to one type of account, such as credit cards. Ideally, lenders like to see timely payments of each account.