How Do Credit Bureaus Determine Your Credit Score?

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Making Sense Out of 5 Factors:

By understanding these factors, you can take steps to improve your credit score and ensure better financial opportunities. 

  1. Payment History (35%) -This is the most significant factor. Consistently paying your bills on time demonstrates reliability and has the biggest impact on your score.

  2. Amount Owed to Lenders (30%) - Often referred to as utilization. This measures how much of your available credit you’re using. Lower utilization is better.

  3. Length of Credit History (15%) - The longer your credit history, the better. It shows lenders how you’ve managed credit over time.

  4. New Credit Opened/Applied For (10%) - Frequent applications for new credit can temporarily lower your score, as it may signal financial strain.

  5. Mix of Credit Accounts (10%) - A healthy mix of credit types (credit cards, mortgages, auto loans) can positively impact your score.

Simple habits like paying on time, keeping balances low, and avoiding unnecessary credit applications can make a big difference over time.

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