Factors that influence your credit score.

There are five important factors that make up your credit scores. By understanding these five basics of the credit scoring system you will be able to better understand why your score will fluctuate. Your credit score changes on a daily basis depending on how you use your credit and more importantly how much of your credit you use. We will take a look at what has the most influence on your credit rating.

"Payment History" is the biggest factor and accounts for
35% of what makes up your credit score.

Lenders like to see that you are using your credit responsibly and making reasonable decisions. Your past performance is most likely an indicator as to how you are going to pay any loans you receive in the future. So making sure you are not late on payments and be responsible with the ways you use credit. If in the past you have had problems making payments on credit cards or other loans remember the most important impact is the last two years of you account history. So don't give up, be careful from now on and look to improve your credit history by cleaning up old entries on your bureaus.

"Outstanding Debt" is the second biggest factor and accounts for
30% of what makes up your credit score.

A bank will look at how much of your available credit line you have used to see if they are under 35%. Your credit score will be lowered if you use more then 35% of your available credit lines. So to keep your scores at their highest levels keep your ratio of debt to available credit under 35%. The next major impact on your score will be the factor of how long you have been maintaining your credit lines.

"Length of Your Credit History" is the thrid biggest factor and accounts for
15% of what makes up your credit score.

This is the amount of time you have been monitored by the credit bureaus. The longer your have established a credit history the more of an impact it will have on your score. The length of your credit history makes up about 15% of you score. After you have reached the 2 year mark it will have even a bigger impact on your scores. The golden number is a credit history of 8 years.

"Inquiring for Credit" is the forth biggest factor and accounts for
10% of what makes up your credit score.

Applying for new credit is the next damaging factor to your credit scores. It can make up around 10% of your credit score. It has its biggest impact during the first year but, will remain on your bureau for 2 years. Be careful when applying for credit card offers and or letting your loan application be shopped around. Simply, know your credit score and shop with the number instead of letting multiple companies pull your credit scores. Each time you have an inquire it will deduct 3- 5 points form your credit Scores.

"Balance Of Credit" is the fifth biggest factor and accounts for
10% of what makes up your credit score.

Something to keep in mind but don't over react is the types of credit lines you open. It is better to have a healthy balance of different types of loans including retail accounts, credit cards, installment loans and a mortgage. This shows you are well balanced consumer and our responsible with your use of credit it will have a small impact of 10% on your credit score.