Your payment history, in other words how you make monthly
payments, if you are ever late or always on time, generally
makes up around 35% of your FICO score. As a result, it is
important to make your monthly payments on time every time.
As you can see, if you miss even one monthly payment it can
impact your credit score significantly. So, make sure you
pay your monthly payments on time to keep your FICO score
on the up and up.
Another 15% or thereabouts is made up of your credit history,
or how long you have had credit. This is important because
it shows lenders how you handle your credit over a long period
of time, rather than just the past 6 months. Many people make
the mistake of closing down a lot of their accounts in order
to have only one account. However, this is a mistake because
you are closing down part of your credit history, which can
lower your score rather than increase it like you imagined.
Debt to Credit Ratio
Know that you know what
makes up 50% of your ratio, you should consider that your
debt to credit ratio makes up a whopping 30% of your FICO
score. Basically this means that the amount of money, or debt,
you have charged on your credit card compared to the credit
limit you have available. This is your debt to credit ratio.
So, the less balance you carry on your credit cards the lower
your debt to credit ratio and the higher your FICO score.
Very Recent History
Another 10% of your FICO score is comprised of your very recent
credit history, or else how you have been handling your credit
responsibilities within the last few months. So, if you have
bad credit and start making on time payments then you can
see a quick improvement in your FICO score because of this.
Also, your very recent history will impact potential mortgage
or card lenders decisions.
A final 10% of your FICO score is comprised of an analysis
regarding other types of credit you have. This includes installment
loans, mortgages, leases, or other types of credit the individual
While your credit score is more or less determined by these
percentages, the equations used by the credit bureaus are
slightly different, but include these elements more or less.
So, as long as you keep these elements in mind and work at
increasing your credit score you can do so. However, you should
get a copy of your FICO score from each credit bureau to see
where you stand.