So, what’s in your credit bureau score? Is it just whether and when I make my payments or are there other things that affect my score? Actually, there are several factors that influence your score and determine how high it is.
Your payment history
Obviously, making payments on time is the best way to keep your credit score high. The odd 30 Day late payment won’t affect you much. Make a habit of it, and you’ll struggle to get credit.
Every time your credit is checked by a potential lender, you score is dinged. The repercussions are somewhat limited, but avoid making a habit of getting it checked at multiple resources as that will indicate financial trouble or that you a chronic credit seeker.
Types of Accounts
Accounts that require monthly payments like a car loan will fare better on your credit than revolving credit lines or credit cards. Also, be wary of too many Buy Now, Pay Later situations, those can also be problematic.
Utilization of Credit
Your credit bureau score is also affected by how you use your credit. It is a good idea to keep a balance of 25% of the available limit on your card or lower. Going above 80% of your possible limit will lower your score, and going over-limit will tank your score. It is better to use a few cards than keep everything on one higher limit card. If necessary, refinance your credit cards into a small loan.
History and Age of Credit
More weight is given to credit that is more recent than credit that is older than two years. Also, lenders want to see a history of good credit. You will have a good credit bureau score if you only have an account for a short amount of time, but lenders won’t consider that to be established enough history. After six years, inactive accounts are removed from your credit, so if you’ve had some bad credit history don’t worry you still have time to recover.
It’s a good idea to keep track of all these factors, and you will see your credit bureau score consistently increase and stay high. Even if your score, is low don’t despair as credit bureau scores can increase by increments of even fifty points in one month’s time as long as you diligently do the right things.