There are five pieces of information the credit bureaus use when calculating your score. Here is the list and the approximate value they carry into the bureaus scoring model.
1. Payment History (45%)
This is where bad credit items are taken into account on your credit score. It will help to remove bad credit items.
However on occasions you may be stuck with a negative listing on your report. There are rumors that after 4 years the impact of a negative listing is drastically reduced. It would be wise to build a positive payment history to help limit the impact of a negative listing.
2. Available Credit to Debt (30%)
This is how much credit do you have available versus the amount of debt. It will lower your score if you have no available credit.
The credit bureaus like to see credit that is available and not being used. This will tell the bureaus that you use your credit responsibly and are not using all of your credit.
3. Length of Credit (5%)
This means how long you have been making purchases using your credit. If you are a new credit user, you can still have a good score.
This factor carries very little weight. Furthermore your use of credit will age naturally, focus your efforts on more important areas of credit repair.
4. Credit Experience (5%)
What form of accounts are you using your credit for? Do you only have an unsecured credit card?
The bureaus like your credit file to be diverse. Do not worry about this because it is such a small part of your credit score.
You will naturally have diverse accounts with time. Your will open accounts such as; mortgage, credit card, car loan, boat loan and etcetera.
5. Pursuit of New Credit (15%)
How often is your credit being checked? Are you frequently having your credit run?
It will help your score if it does not appear that you are frequently applying for new credit. The bureaus do expect to see a number of credit inquires however excessive inquires will lower your score.
However there are individuals that literally open new lines of credit every month. These people will have their score lowered because there credit is constantly being checked.
These weight values are just estimates and not exact. Each bureau varies their scoring model and they choose to keep this information secret from the public. However by building positive payment history and removing negative accounts from your credit report you can increase your credit score dramatically.
Article Source: http://www.alltopinfo.com
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