Understanding your credit score is easy

Good news! Understanding your credit score is fairly easy and you can use this knowledge to repair and keep your credit score healthy.

35 percent of your score is tied to your payment history. Don’t panic if you haven’t had a consistent payment history so far. Part of the repair process begins with reaching out to creditors and bureaus to remove inaccurate, misleading, and outdated information from your report forever.

If your payments aren’t current, get current and stay current. Creditors will often work with you to create a payment schedule so you can keep track of payments. Timely payments should be your top priority. It’s the easiest way to affect your credit score.

30 percent of your score is your credit utilization. Your credit utilization is extremely important and you want it to be under 30 percent. What does that mean? Here is an example.

You have three credit cards. Each card has a limit of $1,000. If you do not consider other open credit accounts, you have a balance of $3,000 available. $900 is 30 percent of your $3,000 available balance. You should never charge the three accounts combined for more than $900 in total.

Add up your credit accounts and then add up how much you owe in those accounts. If it’s over 30 percent, pay off the remaining balances as soon as possible. You will see an improvement in your credit score.

Bonus tip: Don’t let your credit card balance carry over from month to month. If you can’t afford to pay off a balance within a month, don’t spend the money unless it’s an absolute emergency. This keeps your credit utilization below 30 percent and immediately helps your credit score.

15 percent of your score is the length of your credit history. How long have you borrowed? If your credit history is good, you are considered less risky than someone who has just started borrowing. You are more trustworthy when you have successfully demonstrated your ability to repay borrowed money

10 percent of your score is accounted for by new accounts and credit requests. A newer credit account is considered riskier than an older credit account because you haven’t created a payment history. The same applies to a new loan request. If you apply for more credit, you’ll have to borrow more money than your monthly income — telling creditors you’re spending more than you’re taking in.

10 percent of your score is your credit mix. A good credit mix is ​​a good way to build good credit. A car loan, mortgage, and credit card make a good mix of credit.