Lenders want to know how you have handled your accounts in the past. Such accounts as credit cards, retail store accounts, installment loans, finance company accounts and mortgage loans. Your payment history is just one piece of the score calculation, although it can be very important.Key Factors That Affect Your Credit Scores

If you are just trying to establish a credit record, you have few options to improve your score, since how long your credit accounts have been established is what counts. Most often, the longer the credit history the better your credit score can be. However this only makes up 15% of your overall score. So even young people, students and others with short histories can still have high credit scores as long as the other factors show positive results. Parents should take note that establishing a credit record for your children before they go out on their own could give them a leg up when they apply for credit later.

In an attempt to improve their credit scores, people sometimes make the mistake of closing down credit cards accounts where they have small balances and consolidating their debt under one credit card. If you have a credit card with a very small balance and no late pays. Even though the balance is low, this still looks very good as it shows that you are able to manage your credit responsibly and this reflects positively on your credit score. If you should close the accounts and consolidate all the debt on one card that you nearly max out, this can actually worsen your score since the percentage of your lines of credit that is still owed would actually go up.

While owing a lot of money on many accounts might indicate that you are overextended, your score will not necessarily be harmed by large outstanding amounts. Paying off your credit cards in full every month does not mean that they won’t show a balance on your report. What is more important is how many accounts have balances and how much of the total credit line is being used on credit cards and other “revolving credit” accounts.Key Factors That Affect Your Credit Scores

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