Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
If you’ve ever tried to apply for a car loan, a mortgage, or credit card, you already understand the importance of the information on your credit report. Any blemishes, such as missed payments or accounts in collections, can negatively impact your credit score and may make it more difficult for you to obtain new credit.
Because your credit report is such an important part of your financial life, it’s important to understand how it works and how your actions can positively or negatively impact your score.
How is my credit score determined?
Each credit reporting agency (CRA) has its own model for evaluating your information and assigning you a credit score, so your scores will vary from CRA to CRA. Also, you should know that your scores are updated each time there is a request for a score, and new information received impacts the model. In general the five following factors are considered:
1. Payment history. Your payment history accounts for approximately 35 percent of your Equifax credit score, and includes information like payment history, public records and collection items, and number and type of accounts that have been paid on time.
2. Amounts owed. Approximately 30 percent of your score is based on the amount owed on different types of accounts. This amount—also called your credit utilization rate—tells lenders how much of your available credit you’re using.
For example, if you have a $1,000 balance on one card and a $2,000 balance on another, and your total credit limit is $6,000, your rate is 50 percent. In general, creditors like to see a utilization rate of 30 percent or less.
3. Length of credit history. The amount of time your credit accounts have been established accounts for 5 to 7 percent of your credit score. This takes into account the oldest account and most recently established account, as well as how long it has been since there was activity on certain accounts.
4. New credit. Roughly 10 to 12 percent of your credit score is based on recent activity—how many new accounts you have opened, how many new credit inquiries appear on your file, and the total balance of your recently opened accounts.
5. Type of credit used. The types of credit that appear on your credit report—and how many of each type you have—account for approximately 15 percent of your credit score. Different types of accounts can include auto loans, major credit cards, and retail store credit accounts.
What can I do to help improve my credit score and creditworthiness?
Everyone’s situation is different, so there’s no one-size-fits-all answer. In general, though, there are three things you can do to positively impact your credit score:
1. Pay your bills on time. Since payment history is weighted most heavily when factoring your credit score, delinquencies could have a negative impact. To avoid serious delinquencies and collections, you may want to use online banking to automate your payments. You can also set reminder alarms on your smartphone calendar that go off a day or two before your bill is due.
2. Track your credit utilization. Using too much of your available credit could ding your score. To keep an eye on your spending, try tracking credit card purchases using your checkbook register—just as you would when writing checks or making debit card purchases. Or, consider using a program like Mint.com or Learnvest to see your spending across all of your accounts.
3. Don’t apply for new accounts all at once. It can be tempting to open a new credit card every time you get an offer in the mail, or open a retail store card just for the discount. But opening a new account shortens your average account age and could negatively impact your score, so it’s important to assess your overall financial picture before opening a new account.
Weigh the benefits—a larger credit limit, for example—against the risk of a shorter average account age to help you decide whether to open a new account. Also, you may want to avoid closing the credit account you’ve had the longest.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.