How do you pay your bills?
This affects 35% of your credit score.
If you have had late payments in the past, it has most likely affected your credit score negatively. If this has happened to you, don't worry. Just focus on getting your payments in on time right now.
If you think that paying the entire balance in full every month will help, you are not necessarily right. You need to make payments, but this doesn't mean paying off your entire credit card every month (although if you don't want to pay any interest, you want to pay it off in full every month.)
How much do you have in available credit?
This affects 30% of your credit score.
This means two things: how much outsanding debt you have (how much you owe to credit cards, car loans, student loans, etc.) and how much credit you have available (if you have 10 credit cards with $10,000 available, you may have $100,000 available in a credit).
Be careful with this. If you are consistantly maxing out your credit cards, you are perceived as a risk. On the other hand, if you don't use your credit at all, you don't have a track history.) People who have the best scores are people that use their credit sparingly and keep their balances low.
How far does my credit history go back?
This affects 15% of your credit score.
The longer you have had a credit line the better. Let's give an example. Let's say you have come into money, and you want to pay one of your lines of credit off. You have a student loan that has been around for 10 years, your car loan has been around for 2 years, and you have a credit card taht you opened 5 years ago. Pay off the car loan first because you have had it the least amount of time. (This is saying all of the interest rates are similar. If you have a higher interest rate on one, always pay that one off first!)
Mix of Credit
This affects 10% of your credit.
You should have a mix of revolving credit (such as a credit card) and installment credit (such as a car loan or a home loan). This shows that the borrower is able to handle a variety of credit.
New Credit Applications
This affects 10% of your credit.
If you have been opening a lot of new credit cards or have a lot of credit applications. If you are shopping around for a loan, this shouldn't affect your credit.
If you are consistantly looking at your credit score (or someone else is) your credit score may go down or if you have missed a payment when shopping around for a loan, your score may go down.
What doesn't affect credit score?
Age, sex, race, Job or length of employment, Income, Education, Marital status, whether you have been turned down for credit, length of time at your current address, whether you own a home or rent, information not contained in your credit report.
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