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A Quick & Easy Guide to Understanding Credit Scores

The highest credit score is 850, which allows for the best interest rates and lower monthly payments.

What makes up the credit score?

  • 35% = Payment history
  • 30% = Available credit on revolving accounts (capacity)
  • 15% = Length of credit
  • 10% = Accumulation of debt
  • 10% = Mix of credit

What type of actions lower the credit score?

  • Late or missing payments
  • Closing credit cards out (which decreases capacity)
  • Excessively applying for credit
  • Opening numerous accounts in a short period of time
  • Having more revolving loans in relation to installment loans

What does not affect the credit score?

  • Debt ratio
  • Income
  • Length of residence
  • Length of employment

Approximate credit weight for each year:

  • 40% = Current to 12 months
  • 30% = 13-24 months
  • 20% = 25-36 months
  • 10% = 37+ months

How to improve the credit score:

  • Lower credit card balances
  • Do not close credit cards (which decreases capacity)
  • Make payments on time
  • Do not open numerous new credit card accounts
  • Acquire a solid credit history with years of experience
  • Move revolving debt into installment debt
Caddo Parish Teacher's Federal Credit Union | Federally insured by: NCUA Equal Housing Lender.