When you are looking to achieve better credit scores you need to begin by looking at your current rating and understanding why your credit is in its current position you should then proceed to develop a plan that will help you better your scores and maintain them. There is no quick fix for your credit and it will take hard work dedication and discipline to improving your credit score.
There are five factors that are considered when calculating credit scores and each has its own weighting. Among them there are those that are more significant than others and knowing how they are weighted will help you in prioritizing.
Repayment history is the most significant of the five factors and constitutes 35% of the overall score. It therefore means that you need to manage repayments very well as they could easily make or break your score. Do not delay or default payments and you will have some good grounding with a 35% score.
The second item is outstanding balances which takes 30%. Outstanding balance is the amount of credit available before your card gets to the limit allowed. Having a better balance will not only mean less payment for you to make, it will also mean that you will have more credit at your disposal in case of emergency. Also refrain from using up credit immediately after you have made your payments as this may be indicative of financial problems and may ruin your financial planning goals.
Your length of credit history comes third and constitutes 15% of your credit score. Having been around longer actually counts for something here.
The types of credits used and new credit are the last two and each of these constitutes 10%. Credits used consider the different channels through which credit is accessed while new credit actually considers new lines of credit that have been successfully applied for. It is however important to note that should your application for new credit fail, then you are bound to be negatively affected with a score of up to 10%.
Knowing all these factors and how they affect your credit score puts you in a position where you can design a recovery plan or manage your credit so that you maintain a good score. Those who have experienced bad credit know that it is not an easy affair to clear your record. The best approach is to ensure you have a good score and maintain it. Should you get into financial problems, make sure to take remedial action at the earliest opportunity.
