Credit Clean Up

Understanding Your Credit Score

As you might expect, payment history is the most influential component in your credit score, followed closely by the amounts you owe. To lesser degrees, the length of time you've utilized credit, the number of new accounts or inquiries you have, and the various types of credit accounts you hold also impact your score. Overall reporting also looks at how these factors relate to each other in the context of your personal usage.

Stand out from the crowd

Credit Cleanup

Your Credit Score is determined by 5 factors of differing importance:

35% Payment History

How often do you pay your accounts on time?

Late payments may lead to a lower score.

30% Amounts Owed

How much of your total credit have you used

Less is more! Lowering debt can be the key to a better credit score.

10% New Credit

Have you opened any new credit lines lately?

Opening several accounts in a short time can lower your credit score.

10% Types of Credit Used

Do you have more than one credit line?

Having experience with different types of credit (e.g., car loan and a credit card) can help your score.

15% Length of History

How long have you had credit history?

A longer history of responsible credit use will likely lead to a higher score.

Tips for establishing and maintaining healthy credit

  • Borrow only what you can afford to repay.
  • Make all of your payments on time.
  • Avoid excessive requests or inquiries for credit
  • Have an emergency account to pay for unexpected expenses
  • Check your report annually to contest and remove any erroneous information
  • Keep a high credit line and a low balance. Credit utilization ratios measure this relationship, and lower is better.
  • Do not open new store credit cards just to save on a purchase. New accounts can lower your score, and too many payments can be difficult to manage. Saving 10% on a $300 lawn mower means little if it costs you even just fractionally more on a $300,000 home loan.
  • Do not open new accounts just to transfer balances for an introductory rate. In addition to possibly lowering your score, these offers often have traps. Instead, use them to leverage a lower rate from your existing card company.
  • Do not close old accounts. If you have a good record of payments on old accounts, these will benefit your score. Using them occasionally and conservatively will keep them active and contribute toward a good score.
  • Do not be afraid to use credit. Without the use of credit, you will have no score, and that can be just as bad as a low one.
  • Maintain a variety of account types. A combination of revolving, installment and secured financing along with excellent records of payment will yield a higher score. Still, don't run out and open an account just to have diversity, as this is the least influential factor.