Credit History Age

Category: Finance, Credit.

There are five key factors that make up your FICO score, which is also known as your credit score: your payment history, the length of, any outstanding debts your credit history, the number of inquiries, and the types of accounts held. Your payment history comprises 35% of the score, your outstanding debt is 30% , your credit history age makes up 15% , and both the number of inquiries and account types are 10% of your total FICO score.

Each of these elements is given a different weight in the calculations that determines your FICO score. Now you know what factors are included in your credit score. And more importantly, what is considered good and what is bad for each of these components? What does each of these elements include? Payment History. Or for that matter, if you ve been paying them at all.

Your payment history includes the details of how you ve been paying your bills. Each credit account you hold reports your payments as either on time or late. After six months of no payments being made, many creditors charge- off your account, considering it an uncollectible account. Late payments are reported as being 30- , 60- , 90- , and 120- days late. The more recent the late payments are, the more detrimental the effect is on your credit score. Outstanding Debts. On- time monthly payments increase your score in this area.

This portion of your FICO score takes into account the total amount you owe on all your credit accounts. In addition to considering the total amount you owe, the FICO score also considers the total amount of credit you have available. This includes credit cards, student loans, department store cards, auto loans, open lines of, mortgages credit, etc. This ratio is known as your credit utilization. It is best to keep credit account balances at or below 30% of the limit. The higher your credit utilization, meaning the closer your balances are to the limit, the lower your credit score.

Credit History Age. A longer credit history is better than a shorter one. The length of time that you have had credit is another important factor of your FICO score. This is because there is more data to create a pattern of good or bad payments. Each time a lender uses your FICO score to make a decision about extending you credit, an inquiry is made to a credit bureau. Inquiries. This inquiry will appear on your credit report.

The fewer the inquiries the better. Multiple inquiries within a relatively short period of time have a negative effect on your FICO score, especially if these are credit card inquiries. The good news is that only inquiries from the past 24 months are considered as relevant to your FICO score. When you have several different kinds of credit accounts, such as loans and revolving credit, it is better than having only one type of credit account. Account Types.

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