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          How is My Credit Score Calculated?

There are 5 factors that make up a credit score. A credit score range is usually anywhere from 300 to 850 based on the FICO score. Why is it important to understand these 5 factors? Simply put, you can maintain good credit just accomplishing 2 of these sectors which make up 65% of your credit score. We are going to cover this more in depth below. Let's begin. 

Payment History: Paying your bills on time account for 35% of your credit report and it's important you are never late on your payments. If you are then CALL US immediately so we can start working out a plan of action before it hits your credit. Just missing one payment can negatively impact your score very fast. It can be the difference between a 700 and a 600 score just by missing one payment and becoming delinquent. 

Capacity and Amount Owed: The percentage of credit limit available accounts for 30% of your credit score. You want to always make sure you keep your credit utilization rate below 30% at all times! This is paramount because as soon as you go over 30% then it will hit your credit score hard! For example, If you have a $1,000 unsecure credit card then you don't never ever want to go over $300. That's your new limit. If you do go over $300 at the end of the month then it will affect your score negatively. 

Length of Credit: You're credit history is pretty self explanatory. You want to establish a good credit history by showing you can pay your bills on time over a period of time. Remember, Credit is defined as your ability to make payments over a period of time. So you want to be able to show this by having a good credit history on your credit report. This can be with accounts such as installment loans or revolving credit. 

New Credit: Accounts for 10% of your credit score. New credit is basically the number of inquires on your credit report and new accounts opened in the last 12 to 18 months. You don't want to have too many credit inquires a year. This is not good from the perspective of a company you are trying to get a loan from and this will hurt your credit score if you have too many new inquires. 

Type of Credit Used:This is an important sector of your credit score which accounts for 10%. There are a certain number of inquires and installment loans banks want to see when you apply for new credit. If you go over this number then this will affect your score negatively.