Also, I have to ask if you even read the article that graphic came from and what those categories mean, and how they use those categories to determine your credit score.
Credit scores are determined by different categories, with payment history as the most important. Learn more about the factors that affect your score.
www.experian.com
Some highlights, bolded by me.
Payment History
Your payment history, as it appears in your credit report, is typically the most important category in determining your credit scores. Within this category, the scoring models consider:
- On-time payments: A history of paying your bills on time is good for your credit scores.
- Late payments: Payments made over 30 days late will typically be reported by your lender and hurt your credit scores. How far behind you are on a bill payment, the number of accounts that show late payments and whether you've brought the accounts current are all factors.
- Public records: Filing bankruptcy can significantly hurt your credit scores.
Amounts Owed
Amounts owed, or your credit usage, comes just after payment history in importance when determining credit scores. In part, this category includes how much you owe on loans and how many of your accounts have balances. The main consideration in this category, however, is your
credit utilization ratio.
Your credit utilization ratio, or rate, is determined by comparing the current balances with the credit limits on your revolving accounts, mainly credit cards. To
calculate your credit utilization ratio, add up the balances on all your credit card accounts, divide that number by the sum of all your credit card limits, and multiple by 100 to get a percentage. That percentage is your utilization ratio, and generally,
lower utilization ratios are better for credit scores.
Credit scoring models look at each revolving account's utilization rate as well as the overall rate across all accounts. In either case, it's best to keep your utilization under 30%.
Those with the best credit scores tend to use under 10% of their available credit.
Length of Credit History
Responsibly managing credit accounts over a long period of time can help your credit scores.
New Credit
(ME: Pluses and minuses that cancel each other out.)
Types of Credit Accounts
Credit scoring models may also look for experience managing both revolving and installment credit accounts. Having a
mix of accounts can help your scores.
Some credit scores are built for specific types of creditors, such as credit card issuers or auto lenders. Your experience with the correlated types of accounts could be more important for these types of scores.
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Back to me again:
So there you are.
They are looking for people that make their payments on time, are using a small percentage of their available credit, have done so over long periods of time, don't really care about new credit, and don't really care about the types of credit accounts as long as you manage them well.
