Getting the Highest Credit Score

While everyone wants to have the highest FICO score that they can, few people understand just what their credit score is made of. Let's take a look at how your score is calculated.

The single most important factor in determining what your FICO score will be is your payment history. This accounts for 35% of your overall score. The more accounts that you have that have been paid on time, and the longer that it has been since you have been late on an account, the higher your overall score will be.

How you are using credit is the next most important factor, weighing in at 30% of your overall score. This is called your credit utilization ratio it is determined by looking at how much credit that you have available to you versus what you are using. If you are trying to have the highest credit rating possible, you should try to avoid carrying credit card balances. At a minimum, try to get each account that you have down below 20% of the total credit limit.

How long of a credit history you have accounts for 15% of your FICO score. Those who have a long history of paying their bills on time are handsomely rewarded with a high credit score. Even if you have some small slip ups, they will not hurt your credit score as badly as if you did not have a history of paying on time.

Inquires and new credit accounts for 10% of your overall score. While opening a new account can be good in a long term credit restoration plan, it is important to understand that this will lower your credit score in the short run. This is why you should not open new accounts just before trying to make another major purchase. Likewise, inquiries can really drag down your score. While it is ok to shop around for a good deal on a car loan or mortgage, you should understand that there is only a certain amount of time that this can be done. Lenders choose the credit scoring module that they use, so this time frame can vary from between 14 and 45 days.

Also accounting for 10% of your overall score is the type of credit that you are using. You should try to stay away from finance companies if at all possible, because this can lower your credit score. For the best credit score, you should have around four revolving accounts and also have installment credit history.

About this Author

To learn more about getting the highest credit scores or to learn the strategies I use when cleaning up my credit report please visit us at CreditRepairCollege.com.

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