Payment History – 35% of Your Score (193 pts.) This is the area that examines whether or not you pay your bills on time. It also includes any type of negative information that may be on your file. For instance: if you have bankruptcies, tax liens, charge-offs, judgments, collections, or late pays, this area of your score will be seriously negatively affected. If you need assistance with this area, it is recommended you consult a professional credit coach or consultant to guide you along the right path and properly prepare disputes to be sent to the credit bureaus. Removing the wrong information can hurt your scores!

Outstanding Debt – 30% of Your Score (165 pts.) This area of your score takes a look at the ways that you are actually using your credit. You may have heard that it is important to keep your credit and charge account balances low, and a more true statement has never been made. If you utilize more than 50% of your revolving capacity (that is, your credit limits), you will start to see a considerable negative decline in your credit score. The best bet is to keep your revolving account balances below 30% of their credit limits to yield you the highest credit score, as this indicates the lowest behavioral risk.

Length of Credit History – 15% of Your Score (82 pts.) This area of your credit score examines the length of your credit history. FICO likes to see accounts open for as long as possible, traditionally accounts older than seven years yielding the most points for your score. To ensure you capture the most points in this area, avoid frequently opening and closing accounts or transferring balances onto new accounts and closing old ones. It’s highly important to maintain a lengthy, established credit history to have the highest credit score possible.

Types of Credit Used – 10% of Your Score (55 pts.) Even the types of accounts that you use greatly impact your credit score. The FICO model will yield the highest score for a nice mix of credit. In other words, FICO likes to see a variety of installment loans, revolving accounts, and mortgage loans. To maintain the highest score, you also need to avoid high-risk consumer finance loans from secondary lenders.

New Credit – 10% of Your Score (55 pts.) The final area of your credit score considered by the FICO model examines the number and type of inquiries contained in your credit file, the length of time since your most recent account opening, and other minor factors pertaining to acquiring new credit. Your best bet is to have no more than four inquiries for every six-month period on the credit report from each bureau to prevent a negative decline in your credit score.