How to Improve Your Credit Score

There are five factors that determine your credit score. Here they are listed with the approximate value they carry in the credit bureau scoring model.

1. Payment History (45%)

This is where the bureaus will weight negative credit items from your report. It will help to improve your score if you can clean your credit from negative items.

However even if you have bad credit listed here, if the account is more than 4 years old it will not be weighted as heavily. In addition having positive payment history here will reduce the impact bad credit items have.

2. Available Credit to Debt (30%)

This is how much credit do you have that is available. Are all your credit cards maxed out?

The bureaus like to see available credit. This shows them that you are a responsible user of credit.

3. Length of Credit (5%)

How long have you been using credit? If you are a newbie to the world of credit you can still have a good score.

You should not worry about this aspect when it comes to improving your score. Your accounts will age naturally and this will not make or break your score.

4. Credit Experience (5%)

What are you accounts on credit in? Do you only have credit cards?

The bureaus like your credit file to be diverse. Do not worry about this because it is such a small part of your credit score.

With time your accounts will become diverse. You will have an auto loan, credit card, boat loan and  etcetera.

5. Pursuit of New Credit (15%)

How often is your credit being checked? Are you frequently having your credit run?

It will help if you are not looking to open a new line of credit every month. However the bureaus do expect to see a number of inquires.

However there are individuals that literally open new lines of credit every month. These people will have their score lowered because there credit is constantly being checked.

These weight values are just estimates and not exact. Each bureau varies their scoring model and they choose to keep this information secret from the public. However by building positive payment history and removing negative accounts from your credit report you can increase your credit score dramatically.