How to Improve Your Credit Score
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.
If you are unsuccessful removing negative items you still can have a good credit score. It is rumored that after 4 years a negative item has much less impact on your score. Also you should build a positive payment history to reduce the impact a negative item will have.
2. Available Credit to Debt (30%)
This is how much credit do you have that is available. Are all your credit cards maxed out?
The bureaus like to see available credit. This shows them that you are a responsible user of credit.
3. Length of Credit (5%)
This is how long have you used your credit to make purchases. If you are new to using your credit it is ok, you can still have a high 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 to see diverse accounts. However this is such a small piece of your score that it is not worth opening up new accounts to show this.
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 if you are not looking to open a new line of credit every month. However the bureaus do expect to see a number of inquires.
Some individuals try and make new purchases using their credit every month. For those their score is going to be damaged because of this.
Each credit bureau has a unique scoring model. Thus these corresponding weight values are simply estimates. If you concentrate your efforts on removing negative items from your credit report and build a positive payment history you can achieve a 700 credit score.