Improve Your Credit Score
Here are the five pieces on your credit report the bureaus use to calculate your credit score. In addition you will find the approximate value each piece carries in the credit scoring model.
1. Payment History (45%)
This is where bad credit items are taken into account on your credit score. It will help to remove bad credit items.
However on occasions you may be stuck with a negative listing on your report. There are rumors that after 4 years the impact of a negative listing is drastically reduced. It would be wise to build a positive payment history to help limit the impact of a negative listing.
2. Available Credit to Debt (30%)
This is how much credit do you have that is available. Are all your credit cards maxed out?
The credit bureaus like to see credit that is available and not being used. This will tell the bureaus that you use your credit responsibly and are not using all of your credit.
3. Length of Credit (5%)
How long have you been using credit? If you are a newbie to the world of credit you can still have a good score.
Do not worry about this aspect. Your use of credit will age naturally and this will not impact your score enough to make any concerted effort.
4. Credit Experience (5%)
What are you accounts on credit in? Do you only have credit cards?
The bureaus like your credit file to be diverse. Do not worry about this because it is such a small part of your credit score.
You will naturally have diverse accounts with time. Your will open accounts such as; mortgage, credit card, car loan, boat loan and etcetera.
5. Pursuit of New Credit (15%)
How frequently are you applying for new lines of credit? Are you continuously having your credit run?
If it looks like your credit is being checked continuously it will lower your credit score. The bureaus expect to see credit inquiries but excessive inquires will damage your score.
There are people that try and make purchases with their credit every month. For those their score is going to be lowered because of that.
These weight values are just estimates and not exact. Each bureau varies their scoring model and they choose to keep this information secret from the public. However by building positive payment history and removing negative accounts from your credit report you can increase your credit score dramatically.