fico_score.gifMost lenders use FICO (Fair Isaac Corporation, they developed the FICO, a measure of credit risk, that are the most used credit users in the world) credit scores to get an objective measure of your creditworthiness. By understanding the factors that affect your score, you’ll get an in depth understanding of how creditors view your credit application and how you can bump up your credit standing.

1. Payment history

The factor that has the biggest impact on your score is whether you have paid off the past credit accounts on time or not. It counts for approximately 35% of your score. It should be noted that the recent late payments or missed payments hurt your score more. It will be reflected on your report whether you are 30, 60, or 90 days or more late with a bill payment. A record of late or missed payments on several accounts will hamper your score more than late payments on a single account. So, pay off your bills on time, it will definitely have a positive impact on your overall score.

2. Amount owed

It counts for approximately 30% of your total FICO score. It shows how well you can manage your credit. However, it is not just the amount you owe already that influences your FICO score. Also taken into consideration is the amount of credit available to you. So, total up all the outstanding balances you have and compare it with the amount of credit that is available to you. If you are reaching or exceeding the available credit then it will negatively impact your score.

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