Your credit score plays a role in everything from your mortgage rates to insurance rates. So it’s probably a good idea to know how it’s determined in the first place — then you can figure out how to improve it. The important takeaway is which factors matter the most.
1. Amount of balances owed: ~35%
The ratio of credit available to you to the balances you have on your lines of credit. Essentially, it measures how much of your available credit you use. The less, the better
“having lots of available credit but only using a small percentage of it is good for your score. Having a small amount of available credit and charging up to the limit — even if you pay off the balance monthly — won’t help your score.” (more…)