What makes up your credit score ?

• What is your repayment history? (This makes up 35% of your entire score).
• What is the current total amount of debt you owe? (This usually makes up 30% of your Credit Score).
• How long have you had credit for? How many years have you had credit? (This makes up typically 15% of your total Credit Score).
• How much of your credit make up is “New Credit?” In other words, how much credit have you received within the past 2 years? (This factor will usually count towards 10% of your total Credit Score).
• What is the makeup of your credit? What types of credit do you have? For example, a credit card versus a (This factor will count for 10% of your total Credit Score).

LET’S EXPLORE THE 5 FACTORS IN GREATER DETAIL:

· Payment History (35%):

The single most important factor when calculating your Credit Score is whether you pay your bills on time and for how long. Therefore, a missed payment or late payment can damage your overall Credit Score significantly.

· Amount Owed (30%):

When you are given credit, you are also given a spending cap or credit limit. The amount owed factor looks at the ratio of how much of your credit total you are using in relation to the cap or limit you are set at. Using most of your credit available such as maximizing a credit card limit can damage your credit score.

· Length of Credit History (15%):

This factor is structured to see if a borrower is disciplined and responsible. In other words, the longer you have had credit for, the more likely you are paying your bills on time and therefore are granted ongoing credit over a long period of time.

·New Credit (10%):

This factor looks to see how often you are applying for new credit or how often you are opening new credit accounts. The thinking here is simple. If you apply for too much credit and are doing so very often, it can be an indication that you are desperate or facing financial hardship. On the flip side any old credit that you may no longer be using, is worth keeping open as it reveals that you have credit for a long time, are not using the credit and are credit responsible since you don’t owe money on the credit.

· Credit Mix (10%):

This factor is designed to see whether you are able to manage different forms of credit. For example, unsecured credit like a credit card and secured credit like a mortgage or car lease. A solid mix of the types of credit you have can positively impact your overall Credit Score since it shows an ability to be responsible financially with different credit products.

By taking the above 5 factors into account, you can increase your Credit Score significantly over a little time.

Good luck!