The Credit Score Puzzle, Part 2

Last entry, we talked about payment history and your credit score. Your payment history makes up 35% of your credit score, so paying all your debts on time, over time, is the best way to increase your credit score.

30% of your credit score comes from your outstanding credit balances. If you are consistently maxxed out on your credit cards, you’ll have a lower credit score than if you only use about 30% of your available credit. This is true even if you always pay on time — the rationale being that you don’t overly rely on credit to get by.

Maintaining a low balance shows that you can manage your credit, instead of it managing you.

Next time, the rest of the credit score puzzle.

(C) Susan Pruden.

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