Breakdown of a Credit Score
A credit score is a number used by financial institutions and credit card companies to determine risk level when issuing you a loan or a credit card. Check out the video below as the Credit Squirrel helps Jen better understand credit scores.
Credit scores are calculated by five categories.
1. Payment History
Making payments on time boosts your score
The less you use of your total available credit each month, the better
3. Length of Credit
A longer history of good credit habit raises your score
4. New Credit
Opening lots of new credit cards in a short amount of time can hurt this part of your score
5. Mix of Credit
A mix of revolving credit (credit cards) and installment loans (mortgages, car loans) boosts your score.
Learn more about credit scores by clicking the handout above.
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