Which Items have the Biggest Impact on your Credit Score?

This is the fourth post in our series about building a bad credit score into an excellent score.

If you are seeking ways to improve your credit score, it is important to understand the items that have the biggest impact. This will ensure that you spend your time and energy in the appropriate manner.

Your FICO score takes into consideration both negative and positive information. For example, a late payment will lower your score while establishing a good history of paying on time will increase your score.

According to myFICO, here are the five categories, along with the percentage, that have an impact on your credit score:

•    35%: payment history
•    30%: amounts owed
•    15%: length of credit history
•    10%: new credit
•    10%: types of credit in use

All of these categories are important, but some more so than others. For example, payment history has the biggest impact on your credit score. Have you paid all past credit accounts on time? Doing so into the future will improve your score.

Some of these categories, such as length of credit history, call for a long term approach. If you don’t have a long credit history, there is only one thing you can do: continue to make all the right moves, one month after the next. Eventually, it will pay off.

Now that you know which items have the biggest impact, you can adjust your approach to ensure that your credit score continues to increase over time.