Components That Make Up Your Credit Score
Now that you know how credit scores can affect you, you may be interested to know how you could maintain and improve your credit score to turn your life around.
When it comes to improving and marinating a good credit score, the great news is that there are lots of things you can do to get your finances in control. These are the five key components of your credit score.
- Your payment history
- Owed debt or available credit
- Length of credit history
- Types of credits
- Nature and number of credit inquiries
To determine your average credit score, the major credit bureaus consider all of these five variables. Keep in mind that they are record all your positive and negative events whether they are related to your car loans, credit cards, or home loans.
The available credit element indicates your financial health. It is not a good sign if you have exhausted all your available credit limits. If you have a diverse combo of different types of credits, it helps improve your score.
And do not think that you will have the best credit score if you have recently received your social security number as a brief credit history is not favorable.
Last but not least, do not apply for too many loans since high volume of credit inquiries isn’t good for your credit history or your credit score.