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- Total amount owed on all open accounts. Paying off your credit cards in full every month does not mean that a balance won’t show on your report. Your total balance on your last statement is generally the amount that will show in your credit report.
- Specific types of accounts, such as credit cards and installment loans, are scored differently and in conjunction with the overall amount owed on all open accounts. This also factors into your balance on each specific type of account. For instance, you have a credit card with a very small balance and no late pays. Even though the balance is low, this still looks very good, as it shows that you are able to manage your credit responsibly.
- How many accounts do you have open and how many have balances? A large number of open accounts, even with small balances, can indicate higher risk of over-extension. This is weighted in your FICO score, but most lenders leave it to their discretion, as they have access to your income amount. For the most part though, it is good not to have too many credit card accounts; three maximum.
- How much of the total credit available to you are you using? In other words, are you close to maxing out? For example, if you have a credit card with an available credit line of $1000 dollars and you have a current balance of $850.00 or more, then you are nearly “maxed out”. Several credit cards or other debts with balances approaching the credit limit will affect your score negatively, even if you have made your payments responsibly. Your FICO score will factor your overall ratio of debt to your overall limits.
|
| Account |
Amount owed
|
Limit or Loan Amount |
Percentage
|
| Visa Card |
$500
|
$1000
|
50%
|
| MasterCard |
$50 |
$1000
|
5%
|
| Car Loan |
$11,000
|
$25,000
|
44% |
| Home Loan |
$95,000 |
$145,000 |
65% |
| Total Overall |
$106,550 |
$172,000 |
61% |
|
|
|
Most often, the longer the credit history, the better your score will be. However, this factor only makes up 15% of your total score, so even young people, students or others with short histories can still score high overall as long as the other factors show good. If you are new to credit than there is little you can do to improve this part of your score. Open an account and be patient. These are important factors:Length of time credit accounts have been open or number of months you have been in the credit bureau's file?The age of your oldest account and the average age of all your accounts.How long it has been since you used certain accounts as well as the mix of older and new trade lines?
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