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Factors That Can Affect Your Credit Score

Having a high credit score is obviously a wonderful thing for your financial future. Having a lower score doesn’t spell doom but you’re likely to pay higher interest rates or have more trouble getting a loan. A higher credit score will net you the most loan offers, allowing you to choose the one that’s right for you, with lower interest rates. To obtain and maintain a high credit score, you first need to know the factors that affect your credit score.
  1. Payment History -- A whopping 35% of your credit score is determined by payment history. If you’re consistently late, it’ll reflect on your credit score. Making payments late is better than skipping them altogether but the later they are, the greater your credit score will be impacted.
  2. Amounts Owed -- How much you owe comes in at 30% of your credit score. Taking out massive loans or incurring high amounts of debt will hit your credit score hard. Only spend what you can afford to pay back. Responsibility and self-control is key when it comes to your credit score.
  3. Length of Credit History -- The age of your credit accounts, oldest and average, comes in at another 15% of your credit score.
  4. Types of Credit -- Having a mix of different types of credit can help your score but opening more accounts to do so will hurt as much as it helps. Types of credit include store accounts, credit cards, and mortgages.
  5. New Credit -- The final 10% of your credit score is determined by the amount of new credit you have. Opening new accounts relatively quickly will fly a red flag and hurt your credit score. As a result, it’s best to only open what you have a use for.
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      The most important thing you can remember about your credit score is that it is a reflection of managing your money. Although, things happen that may cause you to miss a payment here and there, or max out your credit card, your credit score is an overview of this. So don’t fret over those few minor setbacks, but work to manage your money and your credit score will reflect this! The other thing to remember is that building your credit takes time. If you are looking to get a car loan to help boost your credit score, stop by our finance department at Crest Cadillac, and we would be glad to assist you in finding your best options!
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