The 5 Things that Make Up Your Credit Score

Testing, testing, 123. Hello welcome back. It’s Amanda Christensen with Utah State
University Extension. Today talking the (counting up music playing) 5 elements that make up
your credit score. (low voice) Credit. (low voice) Talk about credit. What these 5 components are, what they mean,
and how that affects your score. I’ve been teaching financial education for
about 8 years now, and during that time, the number 1 topic I get questions about, without
fail, is credit. Whether that’s a credit report or a credit
score. Today I have the 5 elements that make up your
credit score. Payment history,
amounts owed, length of credit history, new credit, and types of credit used. The first aspect, payment history, makes up
about 35% of your credit score. So, when you make on-time, regular payments
on your debts, that actually is building your score. That is helping to show that you are able
to pay off the debt you incur and regularly and consistently and not miss a payment. The second aspect of your credit score are
the amounts that you owe, the total amount, the total credit that has been extended to
you. It makes up about 30% of your score, so again
a big chunk here related to the amount that you owe. The third aspect of your credit score is the
length of your credit history. This makes up about 15% of your score. Over time, as you’re using credit wisely
and responsibly, your score will build based on the length of that credit history. The fourth aspect of your credit score is
new credit. 10% of your score is made up of how often
you solicit new credit. Every day in the mail when you get a credit
card solicitation, that does not hurt your score. When you however go out and solicit for credit,
so when you go to inquire about a car loan, or when you take out a home loan, or when
you are looking at your student loans, taking out student loans, or when you open a new
credit card, these are all instances where you are soliciting new credit. The fifth and final aspect of your credit score,
coming in at 10% of your score, are the types of credit you use. So you may have guessed not all credit is
created equal, and some are better than others. Others take a higher ding on your score, if
you will, (ding noise 3x), ding, ding, ding for example, a, a loan from a bank is a better
source of credit than a loan from a payday lending institution. There you are, the 5 things that make up your
credit score. The payment history, the amounts owed, the
length of your credit history, new credit, and types of credit used. The number one tip I would give someone who’s
seeking to improve that credit score would be to make consistent, regular, on-time, monthly
payment on your debts, as that’s 35% of your score. It’s the best shot you have at quickly improving
your credit score which improves access for you to different types of loans and rates
attached to those loans. Thanks for stopping by. I’m Amanda Christensen with Utah State University
Extension. Be sure to check the description box below
for some fabulous credit resources and some more in-depth information about your credit
score and what each of these 5 components really mean. Also, leave a comment and let me know what
are some of the other videos you would like to see? What questions do you have about credit? Or what are other questions you have about
financial topics? I think that’s all I have for today, thanks
for watching. I’ll see you again next time, bye! And what you, so, how long ago did you take
out your first loan or did you get your first (cell phone rings) your first cell phone call while you’re
trying to film?

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