Page 14 - increase your credit score

3. Age of Credit: 15% of Your Score

Credit scores are a long-term proposition. You start out with a low score and, as you show
lenders you can pay off your debts on time and keep your utilization low, your credit

scores go up.

This goes back to the purpose of a credit score: To show lenders how reliable a borrower
you are.

If you don’t have any credit or have just a few accounts less than a couple of years old, it’s

hard for businesses to know how you handle debt.

4. New Credit: 10% of Your Score

Scoring models consider multiple new accounts as a sign that you’re in desperate financial
straits. The thinking is that only someone who is short on cash and heavy on debts would

open multiple credit cards or loans in a short amount of time.

It’s a good idea to space out any new credit you get, especially when you’re “churning”
through credit cards, which means you sign up for cards just to get the intro bonuses of

cash back or travel points/miles.

5. Credit Types: 10% of Your Score

This final factor is most important to those who have new credit. As you build a solid
credit history, this factor will become less important.

The point of this category of credit scoring is to judge your ability to handle various

types of credit, but, to FICO’s own admission, credit types “usually won’t be a factor in
determining your credit scores.”

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