Connect with us


Do You Understand The 5 Components Of Your Credit Score?



Credit Score concept with young woman on blue background | Do You Understand The 5 Components Of Your Credit Score? | featured

In the last, half-century, or so, the amount of, and a number of people, using some sort of personal credit, has significantly, grown and increased!

Although credit reporting agencies, freely, publish, how they calculate, one's score, many appear to be, confused about, what is needed, and necessary, to protect, and improve, yours!

It is significant, the three, major agencies, use, slightly different criteria, and/ or, measures, to calculate these, and, therefore, it is wise, to check your report, with, each of these, at least, once per year! (Note: By law, you are entitled to receive, once a year, each of these, at no cost, to you).

With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, the 5 principal components, which impact your score.

RELATED: Household Debt Rises to $14.6 Trillion Due to Increase in Mortgage Loans

Do You Understand The 5 Components Of Your Credit Score?

1. Payment history: Your payment history contributes, approximately, 35%, to the total scores! Even, being later, on a few occasions, especially, if that occurred, somewhat – recently (usually, considered, up to, and including, 3 to 7 years, back). Some belief, if they never, or, very rarely borrow, they will have a better rating, but, agencies want a payment history, in order to clearly, demonstrate, to them, you can handle it, in a responsible manner! It is wise, therefore, to have, perhaps, 2 to 5 cards, and, perhaps, a car payment, and pay them off, promptly, all the time!

2. Amount owed and utilization: Is the total amount, owed, considered appropriate? Compared to, available, lines of credit, how much to do you, have, outstanding? Generally, using, 30% or less, than you have available, is sought! Remember, this category, generally, accounts for about 30% of the total calculation!

3. Length of credit history: The length of your personal credit history, often, determines, approximately, 15% of the total! Lenders, usually, seek some combination of these, and some, with a longer-term/ age, to clearly, demonstrate, to them, a pattern of responsible behavior, regarding, how you handle money!

4. New credit: Every time, one acquires new credit, it impacts your overall score. If you have too much, of this recent activity, it harms your rating! Beware of, becoming, too attracted to, some store offerings, which, might weaken, your overall evaluation! This category accounts for about 10%.

5. Credit mix: One's mix of credit, is often, considered, to be, worth, approximately, 10% of the total evaluation! If, everything, one owes, is on charge cards, etc, it is considered, less compelling, than if there is a mixture, in the type, and length, of what your overall debt, maybe!

Become a smarter consumer, and learn, to handle credit and debt, more responsibly, and protect your score! It's important, but will you, consistently, proceed with, the necessary degree of discipline and commitment?

Richard has owned businesses, been a COO, CEO, Director of Development, consultant, professionally run events, consulted to thousands, and conducted personal development seminars, for 4 decades.

Rich has written three books and thousands of articles. His company, PLAN2LEAD, LLC has an informative website and Plan2lead can also be followed on Facebook

Article Source:

You Might Also Like:

Keep up to date with the breaking news by following us on Facebook and Instagram.

Article Source:

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2022 Breaking News Alerts. This copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.