It’s hard for us to know exactly how our credit score is calculated. However, we can get a pretty good idea of what it’s affect by.
MSN Money does a great job of summing up the 5 things that affect your credit. In short, the 5 things are:
1. Payment History – pay your bills on time!
2. Debt – don’t have too much debt, especially credit card debt
3. Length of Credit History – the only thing that can help this category is time (managing your credit well over time)
4. New Credit – don’t open too many new credit lines in a short span of time (like applying for multiple credit cards in the same year)
5. Credit Mix – the more diversified your debt, the better. Having a combination of mortgage, student loans and credit card debt is better than having all your debt be from credit cards.