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Credit Scores

August 28th, 2009 at 10:37 pm

Your credit score is based on several factors:

1. Payment history - The biggest, about 35 percent of a FICO score. Any late payments or overdrafts will hurt your credit score for several years.

2. Amount owed - about 30 percent, This figure compares the amount you owe to your available credit. an example is somebody who has a $3,000 balance and a $3,000 credit limit. they're maxed out and will look worse than someone who owes $5,000 but has cards with $50,000 worth of limits. This is also the reason that you don't necessarily want to close accounts after you pay them off.

3. Length of history - about 15 percent, the longer your perfect record of on-time payments, the better your score.

4. New credit -- about 10 percent, constantly shopping for credit such as credit cards or bank loans can hurt your score because it makes you look desperate.

5. Miscellaneous-- about 10 percent is for a mix of credit cards, auto loans, and other types of credit.

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