Highest credit score possible
So many people just do not get this and also you know what, I did not either in the beginning. I like a number of other people took credit for granted. I applied for a card, paid my bill, sometimes only the minimum. I would get another offer in the mail and apply for might begin using that card. I'd swap and transfer balances on new offers I got within the mail. I didn't realize what each one of these things were doing to my credit history. I love to have things explained like Denzel Washington says within the movie Philadelphia, "explain it to me like I am a 6 years old."
Lets break up the 5 primary factors in determining Credit Score.
1) Payment History -- is the reason 35% of the credit score. Don't pay late!! 1 day late on charge cards, loans, rent or mortgage and you are going to be charged late fees. Paying 30 days late or even more may cause your credit score to become marked as delinquent as well as your credit score will drop.
2) Balance due is the reason 30% of the Credit Score. This is actually important. The greater you owe in your charge cards and loans, the lower your score. This is known as "Credit Utilization Ratio," and or "Debt Utilization Ratio." Lets have a simple example: if 2 people have credit cards with a $1,000 limit, have always paid their credit card bill on time. One person has used $500 of their credit limit; the other has utilized $100 of the $1,000 borrowing limit. Who has the greater credit utilization ratio?
The one who owes less cash has the better ratio. The debt ratio is your current BALANCE on your charge card DIVIDED by the credit LIMIT.
Anything above 30% begins to have a negative impact on your credit rating. As the debt ratio increases, your credit rating decreases. A debt utilization that's less than 10% is ideal, anything above 30% is simply too much. When you're maxed in your charge cards your credit rating will probably be in the toilet.
Which means you can't almost max your card and tell yourself you'll spend the money for minimum once the bill comes, that hurts your score and you are paying crazy interest on those funds. At this rate you'll never pay off that credit card not to mention obtain a good credit rating.
If you were my 6 years old niece I would say; Take out your charge card statement and find out exactly what the borrowing limit is. Limit is listed somewhere in your statement along with the name and address. If it's not there and you do not know, call the customer service number around the statement.
Next; Look for the total amount in your credit card and divide the total amount in your credit card by the total credit limit. Which means you punch within the balance first into your calculator, hit the divide symbol ( ÷ ), punch in the Borrowing limit, hit the equal ( = ) button and then multiply ( x ) by 100 to get your percentage ( % ) i.e. credit utilization ratio. 500 ÷ 1000 = 0.5 x 100 = 50%. I believe my 6 year old niece would have that. I am not going to test that theory but I think you get my drift now.
3) Period of time accounts happen to be open is the reason 15% of the score. The longer the greater
4) New Credit makes up about 10% of your score. Then when you receive a new loan or mortgage for example expect your score to decrease a little. This doesn't mean take the charge card offer from every department store and gas station that provides you one. That will hurt your credit rating.
highest credit score possible
5) Kinds of credit in use is the reason 10% of your score. It's better to have different types of credit in use, but it's even the least important from the five factors.
credit score
Lets break up the 5 primary factors in determining Credit Score.
1) Payment History -- is the reason 35% of the credit score. Don't pay late!! 1 day late on charge cards, loans, rent or mortgage and you are going to be charged late fees. Paying 30 days late or even more may cause your credit score to become marked as delinquent as well as your credit score will drop.
2) Balance due is the reason 30% of the Credit Score. This is actually important. The greater you owe in your charge cards and loans, the lower your score. This is known as "Credit Utilization Ratio," and or "Debt Utilization Ratio." Lets have a simple example: if 2 people have credit cards with a $1,000 limit, have always paid their credit card bill on time. One person has used $500 of their credit limit; the other has utilized $100 of the $1,000 borrowing limit. Who has the greater credit utilization ratio?
The one who owes less cash has the better ratio. The debt ratio is your current BALANCE on your charge card DIVIDED by the credit LIMIT.
Anything above 30% begins to have a negative impact on your credit rating. As the debt ratio increases, your credit rating decreases. A debt utilization that's less than 10% is ideal, anything above 30% is simply too much. When you're maxed in your charge cards your credit rating will probably be in the toilet.
Which means you can't almost max your card and tell yourself you'll spend the money for minimum once the bill comes, that hurts your score and you are paying crazy interest on those funds. At this rate you'll never pay off that credit card not to mention obtain a good credit rating.
If you were my 6 years old niece I would say; Take out your charge card statement and find out exactly what the borrowing limit is. Limit is listed somewhere in your statement along with the name and address. If it's not there and you do not know, call the customer service number around the statement.
Next; Look for the total amount in your credit card and divide the total amount in your credit card by the total credit limit. Which means you punch within the balance first into your calculator, hit the divide symbol ( ÷ ), punch in the Borrowing limit, hit the equal ( = ) button and then multiply ( x ) by 100 to get your percentage ( % ) i.e. credit utilization ratio. 500 ÷ 1000 = 0.5 x 100 = 50%. I believe my 6 year old niece would have that. I am not going to test that theory but I think you get my drift now.
3) Period of time accounts happen to be open is the reason 15% of the score. The longer the greater
4) New Credit makes up about 10% of your score. Then when you receive a new loan or mortgage for example expect your score to decrease a little. This doesn't mean take the charge card offer from every department store and gas station that provides you one. That will hurt your credit rating.
highest credit score possible
5) Kinds of credit in use is the reason 10% of your score. It's better to have different types of credit in use, but it's even the least important from the five factors.
credit score