What Determines Your Credit Score?

Cronic CDJR - How To Determine Your Credit Score

If you're planning to finance a car soon, your credit score is definitely going to factor into how much money you qualify for or whether you qualify for a loan at all. If your credit isn't so great, knowing what determines a credit score can help you take charge and make changes before it comes time to apply for a loan.

First Part

A credit score is determined by your credit history, which is made up of five factors. The most important factor, which makes up 35% of your score, is payment history. If you regularly make payments on time, your score will be better than if you miss them.

Second Part

The second most important factor is amounts owed, which is 30% of your score. Being in huge amounts of debt will affect your score more than if you have low amounts owed on your credit cards, for instance.

Third Part

15% of your credit score is the length of your credit history. If you're young or just started building credit, your score won't be as high as it could be because you haven't had time to build it up.

Fourth Part

The last 20% is equally determined by how much new credit you have and the types of credit used. Opening up several accounts at once is detrimental to your score, and it's better to have various kinds of credit, including loans, mortgages, credit cards, and retail accounts.

The easiest way to improve your score is to make your payments on time, which you can work at by setting up automatic payments and changing your spending habits. For more information about credit score, give us a call at Cronic CDJR!

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