4 Of The Most Important Factors Of Your Credit Score

According to ValuePenguin, credit scores in the United States are standing at an all-time high, with the average FICO score at 695 (scores range from 300 to 850). Scores fall into sub-ranges, or buckets, within which borrowers categorize borrowers to assess the level of risk associated with extending them credit:

  • Excellent: 750+
  • Good: 700–749
  • Fair: 650–699
  • Poor: 600–649
  • Bad: Below 600

Credit Score Factors

From Capital One Financial Corp. COF’s CreditWise application, here are four major elements, in order of affect to your score, to getting on lenders’ good side.

1. Percentage of payments made on time:
This shouldn’t require much explanation; the more you prove that you’re a timely payer, the more a lender believes you’ll be just as punctual with their money. The majority of Americans are in the 90–100 percent range, which is considered Excellent.

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2. Age of your oldest account:
Having accounts open for long periods of time proves you have experience handling credit and makes you seem more reliable. Most Americans are in the 8–25-year category, but to be considered Excellent, you must have an account more than 25 years old.
3. Percentage of credit being used:
Having your credit “maxxed out” as they say, can be a warning sign to lenders, as it shows you may have trouble living within your means and could be prone to going over your credit limit. About 45 percent of Americans are using less than 10 percent of their available credit, which is what lenders consider Excellent.
4. Number of inquiries in the last two years:
This has a relatively low impact on your score, but having a bunch of requests for credit can be a warning sign to lenders that you’re needy or greedy, or that a lot of others have turned you down. Try to spread your credit requests out across several years. However, keep in mind that when creditors see a series of applications bunched together, they tend to understand you were probably shopping for the best interest rate. Having zero inquiries in the past two years is considered Excellent.

Whether you’re a person looking to build your credit, or someone who’s had a few missteps and whose credit needs some TLC, make sure that keeping a close eye on these four aspects of your credit score is at the top of your to-do list.

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Posted In: creditcredit reportcredit scoresCreditWiseFICOValuePenguinEducationTop StoriesPersonal FinanceGeneral

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