Why Is Your Credit Score So Important?
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What Is the Main Purpose of a Credit Score?
How Can a Credit Score Help You?
What Factors Affect Your Credit Score?
Payment history: Your payment history is the most important component of your credit score because it shows how you’ve handled borrowed funds in the past. If you have a strong track record of paying your bills on time (particularly your credit cards and loans), then you’ll score well in this category. Amounts owed: You can have outstanding debt and still have good credit. But you may experience a credit score drop if you’ve maxed out your available credit. So even if you make all of your minimum payments on time, you may be penalized if you carry a large balance on your credit card, especially in relation to your credit limit. Length of credit history: Your credit score also factors in how long you’ve been using credit. The age of all of your accounts is averaged, so opening new credit lines can cause a dip in your score, and it often pays to keep your oldest accounts open (unless you’re paying a high annual fee). Credit mix: The types of credit accounts you have open also matter to your score. In addition to credit cards, your score could benefit if you diversify with things like installment loans, retail accounts, or a mortgage. New credit: The age of your accounts impacts your credit, as does how frequently and how recently you’ve opened new accounts. Your score could drop if you apply for several new credit lines in a short period of time, since it could signal a financial emergency.
How to Maintain a Good Credit Score
Is Credit Monitoring Useful?
How Does a Business Credit Score Differ from a Personal Credit Score?
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