There are some misconceptions and misinformation about what factors go into determining your credit score. If you want to fix your credit score, it’s important to understand the various categories and how important each of them is. We’ve outlined the five categories that determine your credit score and how heavily each one is weighted
Payment History
Paying your bills on time is crucial to maintain a positive credit score. This category makes up 35% of your overall credit score. Your score might not suffer from a single late payment. However, if you have several late payments over multiple years, it will have a larger impact. The first step to credit repair in Los Angeles is getting your bill payments under control since they have the largest impact on your credit score.
Amounts Owed
This category includes how much total debt you have, what types of debt you have, and how many open accounts you have with balances. It accounts for 30% of your overall credit score. Keeping a low credit card balance is a great way to fix your credit score and reduce your amounts owed.
Credit History Length
Your age is not a factor when determining your credit score, but your credit history length makes up 15% of it. The older your accounts are, the more they will help your credit score. They take into consideration the average age of all accounts, when each account was active, and more.
New Credit
You’ve likely heard that applying for new credit can ding your credit score. It’s true to an extent, but not as much as you might think. Applying for new credit accounts for 10% of your credit score. Hard inquiries, like when lenders check your credit report, can impact your score for 24 months. Soft inquiries, like when you check your credit report, won’t impact your score. The best thing to remember is to only apply for credit when it’s absolutely needed.
Types Of Credit Accounts
Having diversity in your credit history can benefit your score. This category makes up 10% of your credit score. Things like credit cards, retail accounts, installment loans, and mortgage loans provide diversity. When you’re looking for credit help, consider diversifying the types of accounts you have. But of course, don’t take on debt just because you want to boost your credit score as it could have the opposite impact.
Core Credit Solutions provides credit repair in Los Angeles to help you get your credit score back on track. We have over 25 years of experience offering credit help, so contact us any time when you could use some advice and assistance.