Credit Rating Scale Factors
Understanding all of the factors that make up the credit rating scale are important for understanding how to improve your score and where it is you stand exactly. There are a lot of different factors that make up your score. It’s based on the information in your report, which is full of a lot of facts. Some of these factors include the age of your history, your payment history, debts, the types of credit you have, and new credit.
The age of your history is important because it’s important to see a long standing history of positive payments. The longer your report shows that you have been doing things financially, and doing them well, the more it will help out with your rating. On this note, if you have a card that you haven’t used in a long time but is technically still open, you could start using that (lightly) and it will help age your report and improve your place on the credit rating scale.
Another factor is your payment history, and this is a big one. This includes any missed payments, overdue payments, if you’ve filed bankruptcy, and if you’ve been turned into collection agencies. The more recent any of these things have happened, the more heavily they will pull you down. This is obviously the biggest factor in determining your score because potential lenders are pulling up your report specifically to find out if you’ve made payments on time in the past, but it is not the only factor even though it’s the only one most people think about.
Your outstanding debts are another big factor. This does include things like the balance on your cards, your student loans, your car loans, mortgage, and anything else you haven’t finished paying off in full. The more cards you have at their limits, the worse your score will be effected. For a healthy credit rating in this area you want to keep your balances at less than thirty percent and try to pay them off in full each month. The level of your card limits is also important. The more credit that is available to you, and the less you are actually using, the better. It is pretty common on your report for your limit to be misrepresented, so if your report says that your limit is less than it actually is you should call and ask them to change it, that may help boost you up a bit.
The types of accounts you have is also important. Your report is made up of two types of payments, these are revolving (like credit cards) and installment (like loans). You want to have a positive history with both of these types of payments on your report to have the best score possible.
New credit involves your new accounts. This is a fairly small factor, but still something to be considered. Immediately after opening a new account your score will dip for a brief period of time. If you open a lot of accounts at once this will have a more significant effect, however.
Obviously a lot of different credit rating scale factors make up your final score. What’s great about the wide variety of things to consider here is that you have a lot of different ways to go on your journey to improve. Your report is full of all of these facts and is where you should turn if you’re looking to improve.