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What Goes Into a Credit Score? What Information is On Your Credit Exercise—Find Out Your Credit History
There are five factors that go into calculating Report? You are entitled to a free copy of your credit report, once a year, from each of three credit bureaus. Go to
your credit score: Your social security number, date of birth and www.annualcreditreport.com to request a report. You may want to get only one bureau’s report now, and
Payment History (35%)— Do you pay employment information are used to identify you. save the other two for other times throughout the year. NOTE: This site will give you your credit reports,
on time? Do you have any settlements, or Information from Lenders– Lenders report on NOT your credit score. The different credit bureaus may want you to sign up for a monthly reporting
legal judgments against you for not paying each account you have established with them. service in order to get your score. You do not have to do this to get your report. Follow the online
debt? Have you declared bankruptcy? They report the type of account (credit card, auto instructions carefully. See page 4 on how to request your report by phone or mail.
These are the biggest factors influencing loan, mortgage, etc), the date you opened the Once you have your report, review it carefully for any inaccuracies. Are there items that you don’t agree
your credit score. account, your credit limit or loan amount, the with? Make a list of items that you need to address.
Amounts Owed (30%)— How many account balance, and your payment history.
accounts do you have, and how much do Credit Inquiries– The inquiries section contains
you owe? How close are you to reaching the a list of everyone who accessed your credit report How do you feel about the information on your report?
maximum credit limit on your accounts? within the last two years. The report you see lists
Length of Credit History (15%)— How both “voluntary” inquiries, casued when you apply
long have you had a credit record? The for credit, and “involuntary” inquires, such as
longer you have had credit, the better. when lenders order your report so as to make you a
pre-approved credit offer in the mail. Based on the report, how creditworthy are you?
New Credit (10%)— How many credit
accounts have you recently opened or Public Record Items– Public record information
applied for? Too many in a short period from state and county courts. This includes
makes credit companies worry you’re bankruptcies, foreclosures, suits, wage
having credit issues. attachments, liens, and judgments. Raising Your Credit Score
Types of Credit Used (10%)— How many Collection Items– Information on overdue debt The most effective way to improve your credit score, and keep it high, is to develop good credit habits.
different type of credit accounts do you from collection agencies.
have? Agencies look for a balance between Start making your payments on time right now. Pay at least the minimum payment required. If you
credit cards, store cards, installment are over the limit on your credit cards, pay your fees and reduce your balances.
loans, school loans, and mortgages. In general, most negative Start paying down your debt. If you are close to your credit limit on a card, put the card away where
information remains you can’t use it, and work on paying it down. You want to work towards having only 25-30% of your
on your credit history credit limit being used on a card. Even bringing it down to 50% will improve your credit score.
record for 7 years. This Keep credit accounts that you have had a long time. The longer your history of credit, the better your
includes judgments, score. Even if the card doesn’t have the best rates, pay it down, and keep it active to build your credit
most bankruptcies, history.
settlements, charged-off Don’t open new credit cards or reply to every credit card offer you receive. How often you apply for
accounts, etc... new credit is included in your credit score.
Check your credit history and fix any errors that appear. You will need make any corrections with
each of the three companies.
