The five things the credit bureaus look at when your credit score is calculated. You only need to worry about two of these factors to improve your score.
Here are the five pieces on your credit report the bureaus use to calculate your credit score. In addition you will find the approximate value each piece carries in the credit scoring model.
1. Payment History (45%)
This is where the bureaus will weight negative credit items from your report. It will help to improve your score if you can clean your credit from negative items.
However on occasions you may be stuck with a negative listing on your report. There are rumors that after 4 years the impact of a negative listing is drastically reduced. It would be wise to build a positive payment history to help limit the impact of a negative listing.
2. Available Credit to Debt (30%)
This is your available credit versus the amount of debt you have. It will hurt your score if you are using all of your available credit.
The bureaus like to see that you have credit that is not being used. This says you are responsible in your use of credit.
3. Length of Credit (5%)
This is how long have you used your credit to make purchases. If you are new to using your credit it is ok,
you can still have a high score.
This factor carries very little weight. Furthermore your use of credit will age naturally, focus your efforts on more important areas of credit repair.
4. Credit Experience (5%)
What are you accounts on credit in? Do you only have credit cards?
The bureaus like to see diverse accounts. However this is such a small piece of your score that it is not worth opening up new accounts to show this.
You will naturally have diverse accounts with time. Your will open accounts such as; mortgage, credit card, car loan, boat loan and etcetera.
5. Pursuit of New Credit (15%)
How frequently are you applying for new lines of credit? Are you continuously having your credit run?
It will help your score if it does not appear that you are frequently applying for new credit. The bureaus do expect to see a number of credit inquires however excessive inquires will lower your score.
There are people that try and make purchases with their credit every month. For those their score is going to be lowered because of that.
Each credit bureau has a unique scoring model. Thus these corresponding weight values are simply estimates. If you concentrate your efforts on removing negative items from your credit report and build a positive payment history you can achieve a 700 credit score.
