How much money you owe on credit cards, car loans, mortgages, home equity lines, etc. Also considered is the total amount of credit you have available. If you have 15 credit cards that each have $10,000 credit limits, that's $150,000 of credit. Lenders know that people who have a lot of credit available tend to use it, which makes them a less attractive credit risk. While carrying a lot of debt doesn't necessarily mean you'll have a lower score, paying close to the maximum helps lower the score. It shows that you can and will pay. People who consistently max out their balances are perceived as riskier. People who never use their credit don't have a track history. People with the highest FICO scores use credit sparingly and keep their balances low.
4 Mix of credit is 10 percent.
The best FICO scores will have a mix of revolving credit - credit cards, installment credit like mortgages and car loans. Statistically, People with a variety of credit tend to be better credit risks. The thinking is that they have income and know how to handle money.
5. New credit applications count for 10 percent
You get a score for your interest in new credit -- how many credit applications you're filling out. This does not mean that shopping for the best rate with several applications will count against you but shopping for the best rate will hurt your FICO score when you have previous recent credit stumbles like late payments or bills sent to collections.
Also looking for new credit can be seen as an alarm because statistically before people declare bankruptcy and default on everything they look more credit to carry then through. Also the less experience you have had in applying for credit the more the credit inquiry may count
TIPS
.................. FICO relies on information in your credit report and that can be in error. That's why you need to check your credit reports regularly - annually, or at the very least three to six months before planning to buy a house or a car. Get the errors out of the system! For more information see: www.consumerfed.org/pdfs/Providian_Press_Release_9_05.pdf
.......................... For the numbers are addresses of the major credit rating agencies see the article here about identity fraud. * Experian, www.experian.com,* TransUnion, www.transunion.com * Equifax, www.equifax.com Free reports can be obtained once every 12 months. For more on free credit reports, see www.ftc.gov/bcp/conline/edcams/freereports/index.html Do not use internet sources as they may be scams and may not use major credit models.
...........................Not all credit card companies report to the bureaus. Nothing requires this. In fact, some lenders try keep you captive by not reporting how well you do. Also some will not say the ratio of credit used which is a factor showing you use credit wisely. Be sure that they report good credit practices!!!!
..........................Do not use a large percentage of your available credit each month and if you apply for credit do it right after you make your payments.
.........................Consider it you should close your old credit accounts. Scoring models look at both your current use of credit and the length of time you have used credit. Older accounts even if zeroed out help establish your history as a credit user. BUT if you are short of funds, behind, or running high balances on other cards, some may find it a negative.
........................Pretty much everything in your credit report is looked at but everything is weighted. The model looks at more than 20 factors in five categories.
