The ideal usage of your credit is 6% of less. Get that? Using 6% or less of your credit is what makes you look good on paper.
What is your credit score based on?
1. The mix of credit you have. Revolving accounts, bank-issued credit card accounts, installment loans. This accounts for 10% of your FICO score rating.
You can raise your credit score by paying your bills on time, dispute any credit report errors and keep debt under control. You can contact your lenders who may be willing to work with you to set up a different payment schedule OR lower the loan’s interest rate.
Learn to live within your means. Only charge what you can afford to pay off in full at the end of the month.
2. Payment history, a whopping 35% of your FICO score is based on payment history. Late payments, collections, negative public records, this all is included. This shows lenders you are a good borrower, that you pay off your bills promptly.
3. Amount of debt; this accounts for 30% of your FICO score. This includes revolving utilization, accounts with balances, revolving account balance.
This is trickier than it looks. My Experian score went down 20 points. Twenty points!! I got it figured out though. It’s because I wasn’t carrying a balance on anything. You HAVE to show you DO charge things and you DO pay off over time. but just _some_ things. So I charged some stuff and took two months to pay it off. So when it says to pay off everything in full at the end of the month, you need to carry a balance on your credit card every so often.
A month after it was paid off, my score went up 13 points. So clearly, I need to do it again.
4. Credit history length – this accounts for 15% of your FICO credit score. This is in regard to managing different types of credit accounts. What is the average age of your credit history and what is the age of the oldest account is what they look at.
5. Amount of new credit. When did you open the latest account and how many inquiries were there in the last year. This accounts for 10% of your FICO score. So there you have it. How to get your credit score up.