- The My Fico website shows that fully 35 percent of your credit score results from your payment history. Another 15 percent comes from the length of your credit history. Your credit history includes payment information on credit cards, mortgages, car loans and retail accounts. Delinquent payments and accounts turned over for collection hurt your credit score.
- The percentage of available credit used determines another 30 percent of your credit score. Maxing out credit cards and carrying balances on several cards hurts your credit. FICO looks at the proportion of the balance owed in relation to the original loan, when checking installment loans, including car loans and mortgages. Borrowing too much money on installment loans hurts your credit.
- Your credit score considers the length of your credit history. If you handle credit well for several years, your credit score will reflect that. A credit card account with a good payment history stays on your report as long as the account is open. However, once the account is paid off and closed, the history drops from your report after seven years and may drop from your report earlier. Closing older credit card accounts with good payment history or paying off a loan early can hurt your credit.
- Your FICO score considers any recently opened accounts. It also looks at recent credit inquiries. Although new credit only accounts for about 10 percent of your score, when you apply for a new credit card, car loan or mortgage, you can hurt your credit score.
- The Federal Trade Commission warns against credit card fraud. You should check your credit report every year and check your account statements regularly. Although difficult, you can have mistakes on your report corrected. Fraudulent charges or identity theft can hurt your credit score.
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