First lets talk about what factors affect your credit rating.
Factors that Effect Your Credit rating
– Payment History (35{5c84b89e0cba74b6d8cdc777bf9a8338d14dd91243071983e74bc62a6792d410})
– Amount Owed (30{5c84b89e0cba74b6d8cdc777bf9a8338d14dd91243071983e74bc62a6792d410})
– Length of Credit History (15{5c84b89e0cba74b6d8cdc777bf9a8338d14dd91243071983e74bc62a6792d410})
– How Much New Credit (10{5c84b89e0cba74b6d8cdc777bf9a8338d14dd91243071983e74bc62a6792d410})
– Type of Credit (10{5c84b89e0cba74b6d8cdc777bf9a8338d14dd91243071983e74bc62a6792d410})
Your payment history is the most important factor when figuring out your credit rating. Things such as your payment history on all accounts, length of your positive history, when the last negative factor took place, bankruptcy and foreclosure fall into this category.
The amount owed is only worth 5{5c84b89e0cba74b6d8cdc777bf9a8338d14dd91243071983e74bc62a6792d410} less than payment history, so it is almost as important. Too many credit accounts, or too high of a ratio between balance and limits can negatively affect this category.
Length of Credit History can be affected by length of time specific accounts have been open, and the duration of time since each account was last used.
How much new credit you are taking on can affect your credit rating. If you are taking on too much credit and overextending yourself, it can lower your score.
The type of credit that you have can affect your score. A healthy mix of installment loans and revolving credit from banks is considered better for your credit score.
Good and Bad Credit Scores
Now that you know what affects your score, we can look at what a good one looks like.
There is not an exact line that says where good credit scores begin. In fact, the same score could get you a good loan one year, but not the next. There is however a general area.
FICO is the most commonly used system, and scores usually range between 330 and 830. Most people tend to score between 600-700.
So… what score is a good credit score?
Scores above 700 are considered very good and put you in with the less risk group. Scores under 600 are considered low and put you in the higher risk category.
Average Credit Scores
As of January 2011, the average credit score in the United States is 692. This number is from Experions National Score Index.
This number can be broken down by areas or states by visiting www.nationalscoreindex.com
This number is actually below what is considered to be good credit, but this does not mean most people have bad credit.
In fact, 58{5c84b89e0cba74b6d8cdc777bf9a8338d14dd91243071983e74bc62a6792d410} of Americans have a score of over 700.
If you are not included in this 58{5c84b89e0cba74b6d8cdc777bf9a8338d14dd91243071983e74bc62a6792d410}, or just want get your score higher, there are ways to do it.
