Hi I'm Melissa with the Oklahoma College Assistance Program Have you ever wondered what factors determine your credit score? Are you curious about how your financial behaviors affect your credit rating? Many credit scoring models exist, so scores can vary based on the model used and these six basic categories that factor in to your credit score
Number one: Payment History A significant portion of your credit score is determined by whether or not you pay your bills on time and whether you're paying the full balance due each month Make your payments on time, every time, and your score will improve! Number two: Amount of Debt The amount of money you owe can drastically impact your credit score A good rule of thumb is to keep your credit card balance below 30 percent of the card's limit or closer to 10 percent if you can Number three: Length of Credit History Your credit score reflects how long you've managed credit The longer you can demonstrate positive credit behaviors, the better your score gets Number four: Types of Credit Credit cards ,home equity, auto loans and student loans are all types of credit you may have
Using a mixture of different credit lines shows that more lenders are willing to trust you and that they have faith in your ability to manage credit Number five: Derogatory Marks If you've ever filed for bankruptcy, gone through a foreclosure or had liens against your property, these "marks" are reflected on your credit score Derogatory marks stay on your credit report for a minimum of seven years, so do your best to avoid these situations Number Six: Credit Inquiries Part of your credit score is determined by how often you apply for new credit Every time you attempt to borrow money from a lender, a hard inquiry is added to your credit report and stays there for two years
Instead of applying for credit based on a discount or marketing gimmick, carefully research your options and choose the credit tool that fits your needs While there are a number of factors that determine your credit score, things that will never impact your credit are your age, gender, race, religion, or location To make sure your credit score correctly reflects your situation, it's important to regularly monitor your credit report by contacting the major consumer reporting agencies AnnualCreditReportcom provides one free copy of your credit report each year from Equifax, Experian and TransUnion as required by the Fair Credit Reporting Act
Visit OklahomaMoneyMattersorg for more information about credit scores, budgeting, saving and more!