What Determines Your Credit Score?

Your credit score is a number that will affect your ability to purchase some of life’s biggest and best things. Having a strong credit score (the highest score is 850, but scores in the upper 600s and in the 700s are also strong) means you can more easily get approved for higher-limit, lower-rate credit cards and can more easily secure loans with favorable rates for houses, cars, and other big purchases.

There are a lot of factors that determine your credit score. If you are considering purchasing a used vehicle at Bert Ogden Auto Outlet but know that your credit score could use some improvement, spend the next several months focusing on improving it.

Payment history accounts for roughly 35 percent of your credit score. This includes your payment information for regular bills like rent and utilities as well as current credit cards. If you are overdue on payments or regularly make payments late, your score will suffer tremendously. On the flip side, since this is the largest factor affecting your score, regularly paying bills on time (or early) can really improve it.

Balances owed makes up roughly 30 percent of your score. If you have high balances on your credit card, for example, your score will suffer. The best way to improve this portion of your score is to keep your credit utilization low. That means if you have a credit card with a limit of $5,000, try to spend no more than 30 percent of that amount ($1,500) and pay off the full amount every month. By paying off your credit card every week, you can keep your credit utilization (for that account) at nearly 0 percent, which could boost your score.

Credit history length is difficult to improve, as it takes time. This factor, which accounts for 15 percent of your score, is based on the length that you have had accounts open. Creditors like to see that you can manage your debt over a long period of time, so the longer you have accounts open (like a mortgage or car payment), the stronger your score will become.

Types of credit makes up 10 percent of your score. By having various loans — school, car, house, credit card, retail accounts — you can improve your score. But make sure you manage those accounts responsibly.

New credit accounts for the final 10 percent. If you have a lot of new accounts opened recently, your score will be adversely affected. Try not to open a credit card months before applying for a big loan, like a car.

Whether you have a strong credit score or one that could use some improvement, Bert Ogden Auto Outlet will work with you to find a car that suits your budget.