Your CREDIT SCORE shows how risky it would be for a lender to let you borrow money.
5 key components make up your credit score. Let's break each one down:
5 key components make up your credit score. Let's break each one down:
10% = Inquiries: Logged whenever a credit file is accessed.
Improve this by avoiding credit applications when possible, ESPECIALLY before borrowing a large amount (like a mortgage).
Improve this by avoiding credit applications when possible, ESPECIALLY before borrowing a large amount (like a mortgage).
10% = Public Records: Details about bankruptcy or collections
Avoid missing payments and make sure not to default on your loans.
Avoid missing payments and make sure not to default on your loans.
15% = Credit History: How long your credit accounts have been in existence.
Having accounts for longer gives you a better reputation with lenders.
For example, a credit card with ten years of payment history is better for your score than one with two years.
Having accounts for longer gives you a better reputation with lenders.
For example, a credit card with ten years of payment history is better for your score than one with two years.
30% = Credit Usage: How much of your available credit you are using.
$10,000 available and $5,000 used = 50% utilization.
It is recommended to keep usage below 30%.
$10,000 available and $5,000 used = 50% utilization.
It is recommended to keep usage below 30%.
35% = Payment History: How well you have adhered to the rules of your lender.
As long as you make your minimum payments on time, lenders don't give you negative points for this component.
Your payment history includes late/missed payments and collections.
As long as you make your minimum payments on time, lenders don't give you negative points for this component.
Your payment history includes late/missed payments and collections.
Improving your credit score isn't difficult, but working to improve it could give you huge financial benefits:
- Easier to get approved for credit
- Lower rates on mortgages, lines of credit, and credit cards
- Makes home ownership an easier goal to achieve
- Easier to get approved for credit
- Lower rates on mortgages, lines of credit, and credit cards
- Makes home ownership an easier goal to achieve
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