By- Marion Syversen
How can you improve your credit score? The exact formula used in a FICO score (Fair Isaac Company,
the company that computes credit scores) is a proprietary secret, just like the Colonel’s secret recipe for
chicken. But experts say focus on these five areas.
Payment history – 35% of your score is made up of your credit history. Do you pay your bills on time? A
lender wants their money BACK, so your repayment history is, naturally, very important to lenders. Pay,
at least your minimum, payment on time.
Amount owed- 30% of your FICO score is based on the total amount of debt owed. Less is good. Since
these are lenders who think debt is good, your score may be higher WITH debt than without debt. Debt
owed that Is lower than your credit limit provides a better score.
Length of credit history- 15% of your score comes from the length of time you have had credit or a
particular account. As far as FICO is concerned, the longer the history, the better.
New credit- 10% of your score is based on new accounts. Inquiries made into your credit report within a
14 to 45-day window count as one.
Types of credit- 10% of your score is based on the type of credit. Non-secured, revolving credit (i.e.,
from department stores) or credit card debt is not as advantageous to your score as installment loans.
You are not living your financial life to maximize your credit score. Just aim to live with financial
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