Credit Basics: What Makes Up Your Credit Score
Your credit score is an important part of your finances. 💰 It’s like your rep as a borrower. Can you be trusted to pay those bills on time? 🧐 At first, your credit score can seem really confusing. Pero, honestly, it’s as easy to understand as making guacamole. 🥑😋
Your credit score is made up of a few different numbers:
35% of it is your payment history. Are these payments on-time, regular, and steady? Do you have a lot of late fees?
30% of it is how much of your credit you are using. Si quieres ser fancy it’s sometimes called utilization. 🤓 How much of your credit are you using? If you are using over 30% of your credit are you going to be able to pay outstanding debts?
15% is the length of your credit history. Are you a loyal and consistent customer? 😉 You wouldn’t lend money to a noob who has never borrowed money before. Your time with lines of credit helps build up your credit score. 📈
10% is new credit. New lines of credit can boost your credit score. But only a small amount. And if you open too many that can look sketchy and ding your credit score. 🤨😱
10% of your credit is your credit mix. If your credit is only based on credit cards that might not be a win. But if you say have a home loan or student loan debt that can be a 10% win to your credit. Diversity in credit can give you a boost. 🙌🏽
Just like with guacamole 🥑 all of those pieces come together to make-up your credit score. 😉 Like with guacamole, if it is made up of healthy, fresh ingredients your creidt score can be delicioso. 😋But if you have too many messy overripe debts you can end up with some brown mess. 😖
For more help check out the SUMA Credit Card Payment calculator: https://sumawealth.com/tools/credit-card-payoff
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