What goes into your credit score? A lot more than you think. If you've ever wondered about it, here are the answers.
The most common credit scoring model – the FICO® score – takes into account five factors to calculate credit score.
1. Payment history: 35% of your credit score is based on your payment track record. Pay your bills on time.
2. Credit utilization: 30% of your credit score is based on how much available credit you have. Don't rack up debt.
3. Credit history: 15% of your credit score is based on the average age of your oldest and newest accounts.
4. Credit mix: 10% of your credit score is based on how diverse your credit accounts are. Have a healthy mix.
5. Credit enquiries: 10% of your credit score is based on new credit and number of credit inquiries on your account.
To ensure you're on track for a good credit score, keep old credit cards open, even if you're not using them.
Have revolving accounts, avoid carrying high balances and don't apply for lot of new credit in a short time.