How to Get & Maintain a High Credit Score
In the United States, there are three top credit bureaus that determine a person's creditworthiness. Those bureaus are Experian, TransUnion, and Equifax. Understanding how these credit bureaus calculate your FICO credit score can help you build, and keep, a higher score.
FICO scores are typically between 300 and 850, and the higher the score the better off you are. The five main things the bureaus look at to determine a score are payment history, total debt, duration, new credit, and type of credit.
Here are some pointers to help you achieve, and maintain, a high credit score.
Payment history counts for 35% of your FICO score. The bureaus look at how often you pay late & the number of days you were late. Paying your bills on time can improve your score.
Total debt counts for 30% of your credit score. A higher load of debt hurts your score. Keep the amount you owe on credit cards low, don't max out the cards, and cancel any you don't use. Just because you qualify for a $10,000 credit line doesn't mean you need to open it or use it.
Duration counts for 15% of your FICO score. The longer you've had an account the better, so don't open new accounts if possible and keep older ones active. But only keep the older ones active if you aren't racking up more debt. Pay off any new charges in full when possible.
New credit counts for 10% of your credit score. Applying for new credit cards or loans can hurt your score. Any time you apply for credit, it shows up as an inquiry on your history. Try to make all new inquiries within 30-45 days of each other and so they will be bundled and only show up as one inquiry.
Type of credit counts for 10% of your FICO score. A credit card from a bank is better than a department store in the eyes of a credit bureau. But having too many open credit cards can count against you, so try to keep your credit card limit to four at any one given time.
Now that you know how your credit score is calculated, it's time to get a credit check. You are entitled to one free credit report a year. Your credit report will not tell you your score, but you can pay a small fee after getting your free report to get the score. Knowledge is power!
Source: personal knowledge, wikipedia.com
Published by Nikki
Recognized as one of the Top 100 highest-performing writers for 2008, Top 1000 highest-performing writers for 2009 out of over 300,000 contributors, and one of the Yahoo! Contributor Network's Top 1000 contr... View profile
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63 Comments
Post a Commentvery helpful. thank you.
This was written out very easily to read and very useful information.
This was written out very easily to read and very useful information.
Very helpful information I will forward this article to a couple of people I know, very well written.
Nicely done...easy to read and understand the details about a complex subject! This article is a real public service.
Great information on How to Get & Maintain a High Credit Score! Thumbs up! :)
Always a good reminder, thanks!
Michael, I do think the financial conditions will change the dynamics of credit scoring ... such as in the way credit scores are calculated and how lenders look at the true "value" of a person's score. Most likely lenders will use other some other criteria to qualify a person for credit and won't rely so heavily on credit scores. At least that is what I "predict" ... but I'm far from a financial adviser or expert.
Excellent, understandable overview, Nikki. Do you think the changing financial 'conditions,' circa summer 2008 to present, will/is bringing about changes in the dyanmics of what you have presented? If so, what changes can we expect - and prepare for? If not, why not? Money ain't what it used to be, Michael K. Miller
This is helpful. You have solved a mystery here.