Even though your credit report score can vary between the three major credit reporting bureaus, most credit scoring models use the same information to determine your credit score. The weight each bureau attaches to specific types of credit information is the reason why your score can vary between bureaus. Credit scoring by the Fair Isaac Corporation, commonly referred to as a FICO score, is the most widely used by lenders.
Payments
Making on-time payments is most often the largest credit score factor. Your payment history comprises 35 percent of your total credit score. This is the highest percentage of any credit scoring factor. On-time payments to your credit accounts helps to build good credit and increase your credit score. Late or missed payments reflect a negative credit history and decrease your credit score. To maintain good credit, continue making on-time payments. If you want to increase your credit score, bring your late accounts current and make on-time payments each billing cycle.
Outstanding Balances
Your outstanding balances on your lines of credit can account for up to 30 percent of your total credit score. The higher your outstanding balances climb toward your credit limit, the more it will decrease your credit score. The closer to zero your outstanding balances stay, the more it will increase your score. The amount of credit outstanding is important to lenders because it allows them to see whether you are using your available credit responsibly.
Duration of Credit History
The amount of time you've had established credit is also an important factor in your credit score. Creditors want to see a history of responsible credit use as well as on-time payments. The longer you hold positive credit accounts, meaning you are responsible with your use of credit and you make on-time payments, the more it increases your score. Those with years of positive credit accounts look more favorable because they pose less of a default risk to lenders.
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