What Factors Into Your Credit Score?

Your credit score is one of the most important numbers in your life. It determines if you get a credit card, an auto loan and even a mortgage. Your credit score also helps determine the interest rate you pay when you get a loan. Following are the factors that are used to determine your credit score.

'''Payment History'''

Your payment history is a vital part of your credit score. In fact, about 35-percent of your credit score is based on this information. Lenders look at how you have paid your bills in the past and late payments, charge-offs and other negative items adversely affect your credit score.

'''Outstanding Debt'''

The amount of debt you currently owe makes up about 30-percent of your credit score. The more debt you have, the lower your credit score is going to be. Your credit card balances should be no more than 25 percent of their limits to keep a respectable credit score.

'''Credit History'''

The longer you have had your credit accounts, the better your credit score is going to be. This accounts for about 15-percent of your credit score. Your credit history helps give lenders a more accurate portrayal of your bill-paying habits which gives them an idea of how you will be with future bills.

'''New Credit'''

About 10-percent of your credit score is based on the number of new accounts you have opened recently. Opening new accounts will damage your credit score for a short time as do inquiries from potential lenders.

'''Types of Credit'''

The more varied your credit accounts are, the better your credit score is going to be. This factor comprises about 10-percent of your credit score. Whenever possible, it is ideal to have credit cards, car loans, mortgages and various types of credit to show you have experience in paying those bills.