Your credit score is influenced by several factors, Here are the main components that affect your credit score:
1. Payment History (35%): This is the most significant factor. It looks at whether you pay your bills on time, including credit cards, mortgages, and other loans. Late payments, delinquencies, and bankruptcy can negatively affect this portion of your score.
2. Credit Utilization (30%): This measures the ratio of your current credit card balances to your credit limits. A lower credit utilization ratio is better for your score. Keeping it below 30% is often recommended.
3. Length of Credit History (15%): This considers how long your credit accounts have been active. A longer credit history can contribute positively to your score, as it provides more data on your borrowing habits.
4. Types of Credit in Use (10%): This factor looks at the variety of credit accounts you have, such as credit cards, installment loans, and mortgages. Having a diverse mix of credit types can positively influence your score.
5. New Credit (10%): This includes the number of recently opened credit accounts and the number of recent inquiries into your credit report. Opening too many new accounts in a short period can be seen as a risk factor.
Maintaining good credit habits, such as paying bills on time, keeping credit utilization low, and not opening too many new accounts at once, can help you improve and maintain a good credit score.
