You may not be able to determine your credit score if you have never used credit. It is crucial to quickly learn how you can build good credit. There are several steps you can take in order to build a good credit score. The first step is to establish a credit history. This usually requires opening one or more credit cards.
Credit mix
It is important to consider the credit mix in determining your credit score. Your credit score will also be affected by your percentage of revolving and installment credit. In addition, your credit utilization is a major component of your credit score. If you have a mix of installment and revolving accounts, your credit utilization percentage will be lower than if you have a mix of only installment accounts.
Payment history
Your payment history is one of the most important parts of credit scores. Your payment history is a record of how consistent and regular you pay your creditors. This is critical to your credit score since missed payments or late payments could lower your score. Fortunately, there are ways to improve your payment history.
Credit utilization
The credit utilization percent is the amount of credit you have used compared to your total credit. It's calculated simply by adding your current balance to your total credit limit for all accounts. You can usually find this information by logging into your credit card account. Bankrate.com offers a credit usage calculator which can be used to calculate it. You can calculate your credit utilization by taking a $500 credit card limit of $5,000, and spending $500 on it.
Credit history length
Your credit score will be affected by your credit history. It accounts for 15% of your overall score, but other factors are also considered. Your score will increase the longer you have had a credit history. Lenders tend to lend to customers with longer credit histories.
Interest rate
If you're new in the world of credit, it might be tempting to ask, "What credit scores do you need?" FICO and VantageScore average scores are 300. But this isn't where you will start. In fact, it's likely that your initial credit score will be around the 500 mark. As you establish yourself as a responsible credit user, your credit score will quickly climb.