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Understanding your credit score

From getting approved for a loan to lower interest rates, there are many benefits to improving your credit. The higher your credit score, the better. A high score indicates lower perceived risk to lenders. A credit score of 800+ is exceptional, while a credit score of less than 580 is poor.

How is my score calculated?

Your score is developed using credit data that is grouped into five categories:Length of Credit History (15 percent)—In general, a longer credit history will increase your score.Credit mix (10 percent)—It’s beneficial to have different types of credit such as credit cards, auto loans, mortgage loans, etc.

New credit (10 percent)—Avoid opening several credit accounts in a short period of time. This can represent a greater risk to the lender, especially for those without a long credit history.

Payment history (35 percent)—Pay your debts on time. This is the single most important factor of your credit score.Amount owed (30 percent)—Avoid using a lot of your avai...

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