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What Makes Up Your Credit Score?11/30/2015

When it comes to credit scores, there’s almost always room for improvement. If you want to see your credit score increase, there are several strategies to boost it. But first, you need a little insight into how that score is calculated.

Fair Isaac, the company that generates your FICO score, uses five major categories of information, all of which are reported to the credit bureaus by your lenders. Each category is weighted differently. Here’s a breakdown:

What Makes Up Your Credit Score?

Payment History
35% of your credit score is based on your payment history and whether you pay on time.

If you want to improve your score, pay your bills on time. One day late is still considered late, and just one late payment can lower your score.

Amounts Owed
30% of your credit score reflects the amount you owe. Credit card debt is going to lower your score more than installment debt like mortgages, auto loans, and student loans.

If you want to improve your score, try not to carry too much debt; aim to use less than 10% of the total revolving credit available to you (not including installment debt).

If you need to pay down debt, check out SavvyMoney where you can find personalized recommendations for building a debt repayment plan and building a budget.

Length of Credit History
15% of your credit score is driven by the length of your credit history.

If you want to improve your score, keep old credit card accounts open. Your credit score benefits from longer relationships with lenders. If you can, try not to use them or lock them in a safe deposit box to use only when necessary.

New Credit
10% of your credit score is driven by how often you shop for credit and open new accounts.

If you want to improve your score, stop shopping for new credit. Every time you apply for a new credit card or loan, the lender looks at your credit history, which can lower your score.

Credit Mix in Use
10% of your credit score is based on the kind of credit you have. A mix of credit cards and loans is best.

Having a mix of credit in your file – mortgages, student loans, auto loans, credit cards – shows that you can manage debt from multiple sources.


Errors and incorrect information can lower a credit score, so reviewing your credit report regularly is important. You can get a free copy of your credit report every year from each of the three major credit bureaus. If you find any errors, you should dispute them directly with the creditor or you can start with the credit bureau (who will forward the dispute to the creditor).

Content provided by SavvyMoney

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