No, there isn't a quick fix to your credit problems, but by understanding how your credit score is determined can help you take steps in improving it. You won't be able to turn a 500 credit score into a 700 overnight, but once you begin to practice smart credit habits, your score will begin to improve.
But before you can begin to make any improvements, you really need to know how your score is determined. Your FICO score takes into account many factors, but some are far more important than others.
What Makes Up Your Credit Score:- Payment History – 35%
- Total Amounts Owed – 30%
- Length of Credit History – 15%
- New Credit – 10%
- Type of Credit in Use – 10%
As you can see, simply making payments on time and keeping the total amount of debt down accounts for over 60% of your score. That doesn't mean that the length of credit history or the type of credit in use aren't important, but you should probably focus your efforts on the top two. Her is some additional information and tips to improve your credit.
Jeremy,
Understanding how each part of your credit score is made up is important. Thanks you for this article!
But equally important is making sure your credit report is accurate. You do not ever have to pay to review this. There are many companies out there that offer services for a monthly fee. However, federal mandate allows you to view your credit history for free from the credit bureaus.
At Thrive, we make sure that people know what to do with this information to increase their scores over time.
Good article. First step to improving your score is to know what it is. Monitor your score, pay bills on time, and do not apply for more credit than your income can support.
Great post – thanks for the info.