The factors that influence your credit score can be seen as falling into five basic categories. First of all the credit score reflects your payment history. How you pay your bills, the amount of your debt that is paid on time, the part that is past due, and the part that the creditor has written off as an uncollectable debt. Also included in your payment history is how long you have had the accounts you hold and how many are current compared to those that are closed.

The outstanding debt that you are carrying on a monthly basis is the second criteria that banks and credit reporting agencies look at in deriving a credit score. How many months have you been unable to pay the full amount due on your revolving credit cards? How “behind the eight ball” you are as regards the payment of your mortgage, car loans and other secured and unsecured loans are all taken into consideration.

When did you get your first credit card? How much credit were you given? This represents your credit history. For people just beginning to develop their credit history, i.e.; students who have just graduated school and are looking for their first job, they obviously will not have a long credit history, if any at all. They may have had to take out a student loan to finance their education, but most likely, they have not begun to pay it back yet.

The fourth area that is looked at to determine your credit score is your pursuit of new credit. When most of us have “maxxed” out the minimal credit we have been given, we search for more credit in an attempt to buy more of the comfort items that will make us feel better. We take the mail we receive from credit card companies, and apply for them, often signing up for exorbitant rates of interest, just to get credit. This in due course affects our credit report card and cause trouble when one might want to apply for bigger and more useful loan say to buy a house, car or something that will be an asset tomorrow.

The last area that is considered as a determinant of your credit score is the types of credit you are using on a regular basis. If the major or main source of credit is department store card or bank generated revolving credit cards expect to have a lower score than if you are utilizing secured or unsecured personal loans. Car loans, mortgages, real estate loans on developed or undeveloped land help your credit score if they are paid off on a regular basis. Also included, in this, are all inquiries that other financial institutions have made of your credit report, any judgments and defaulted accounts that have been taken out against you within the period of inquiry. All of these items are weighted and the credit reporting agencies produces an accessible report along with a credit score.

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