Equifax Lists Three Ways to Help Build a Solid Credit History

November 07, 2014

credit reportLearning about credit and how it can affect your daily life is important. Lenders look at different information found in your credit history to determine your credit score. By checking your report regularly, you are able to see what lenders are reporting while you monitor your payment history.

Sometimes, your credit score can fluctuate. If this is the case for you, the three tips to help build solid credit history in the Equifax Finance Blog article,

“How Pulling Your Credit Report Impacts Your Credit Score, and Other Credit Score Facts.”

First, be careful when opening too many accounts at once. If you open too many, it can affect your average account age. Your average account age is the length of your credit history. By having a long credit history, lenders are able to see more information about your credit behavior. If you are deciding to open a credit card from a financial institution and from a favorite retailer, remember that having two “fresh” accounts will appear on your credit report and may shorten your average account age and impact your credit score.

Try to avoid making late payments. Payment history accounts for 35 percent of your total credit score. When having several different accounts, such as credit cards and a mortgage, make sure to pay at least the minimum payments on all accounts. Be careful not to pay just one bill at the expense of the others. When missing a payment, the length of time past due and the balance are factored into your credit score. This could remain on your history for up to seven years.

Finally, be sure to avoid high balances on your credit card.  Keeping a high balance on your credit cards could cause lenders to view you as an irresponsible credit borrower. This is because your credit utilization ratio, the amount of debt used in relation to the amount that is still available, is too high. For example, if your credit limit is $1,500 and you only use $500 a month, your credit utilization ratio is 33 percent. This means you are using 33 percent of your available credit. Keep in mind the optimal ratio is 35 percent or below.

Every month, it is a good idea to keep track of your credit report. By monitoring your credit report, you will be able to see how lenders view your credit history. To learn more about credit reports, continue reading the full article on the Equifax Financial Blog.

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