How Do Credit Card Companies Assess Your Credit Score?
In order to get a good APR on your credit card, you first need to have a good credit score. To check your credit score, order it through the mail or through an online service. A score above 650 will be necessary to get you the best credit card rates for Sarasota, FL. Before you can go about improving your credit score, you need to know what credit companies assess you on. Sarasota Banking Rates brings you the information you need to improve your score.
Credit companies grade you using five different categories:
- Payment History – 35% of your score comes from your bill payment history. If you pay bills on time, your score improves. Late payments on credit cards, mortgages, or loans can make it drop dramatically.
- Credit Utilization – 30% of your score comes from your current balances on things like credit cards versus how much credit you actually have available. The lower the amount of debt on your cards is, the better your score will be. A wider base of credit also helps, like having five different credit cards which you use in a rotating cycle.
- Length of Credit History – 15% of your score comes from this category. This can be the trickiest for young adults who have little to no credit history but need loans for school, car purchases, and beginning their adult lives. A longer positive credit history can have a positive impact on your score.
- Type of Credit Used – 10% of your score is determined by whether or not you use different types of credit. Sticking to only one type can lower your score. Diversifying your credit can improve it.
- Recent Searches for Credit and/or Amount of Credit Obtained Recently – 10% of your score comes from your recent credit activity. Multiple credit inquiries around the same time can hurt your score. Try to space out credit applications in order to avoid this.
Keep these categories in mind when you are attempting to improve your credit to get your low interest credit card.
