There are several ways of improving your credit score. Take note that it is a highly significant measure to prove your credit worthiness. To calculate your credit score, there are several factors being considered. CafeCredit.com helps us to know more about it
- Payment History – It covers about 35 percent of the score. It reflects whether you are making payment on time or if you missed payments. In other words, your payment history is the reflection of your entire performance in managing your debts and financial accounts.
- Length of Credit History – This factor accounts for 15 percent of the credit score. If you have a longer history of timely payments, then you will have a higher score.
- Your Accounts – Another vital part to calculate your credit score is the account types you have. It comprises 10 percent of your total score. A mixture of accounts, involving retail cards, credit cards, home loans and installment loans, can enhance your score.
- Credit Activities – It composes 10 percent of your credit score. If you have several accounts or got open accounts, this implies that you are in potential financial problem which eventually lowers your score.
- Amount You Owe – The total amount that you ow on credit cards and loans can make up to 30 percent of the score. Other things are included such as types and number of recent accounts you have and even the money proportion owed than the credit available in you.
One of the most effective strategies to enhance your credit score relies on the responsible management of your credit cards and loans. Always consider making prompt payment to have a good credit history and achieve excellent or at least very good credit score.
When you know how to calculate your credit score, then you can completely focus on those factors and take good care of them. It will save you from headaches and troubles in the long run.