Learn how it works and how to increase your credit score

You know what it means credit score? That's one way to help inform to those who work as moneylenders their ability to pay back the money they lent them.

When determining your score, the credit bureaus consider a number of factors related to your financial history. Thus, including your payment history, whether you paid your account on time, and amounts owed, your past and current credit accounts.

D.and that way, uno credit score 850 perfect is hard to come by. But an excellent score is more achievable.

Why have a great credit score

When you apply for credit, lenders review a detailed summary of your financial history. Known as your credit report, it is used to determine if you qualify for a particular form of credit.

And a part of your credit report is the three-digit number known as your credit score. So if you want to get the best credit cards, mortgages, and competitive loan rates that can save you money over time, excellent credit can help you qualify. Excellent is the highest level of credit score you can have.

What factors influence your credit score?

The various ranges of credit score they vary according to the scoring model of the credit bureau. You can then see what score range you fall in using estimates from the Experian credit bureau.

So, for you to understand the differences, let's bring the main factors that FICO and VantageScore consider. 

FICO Score

Very poor: 300 to 579
Fair: 580 to 669
Good: 670 to 739
Very good: 740 to 799
Excellent: 800 to 850

• The payment history (35% of your score): it has to do with the payment of your previous bills, if you have paid them on time;
• amounts owed (30%): it has to do with the total amount of loans and credit that is being used contrasting with your total credit limit, it is also known as the usage rate;
• length of credit history (15%): the length of time you have had credit;
• credit mix (10%): it has to do with the diversity of credit products you have, including installment loans, mortgage loans, credit cards, etc;
• new credit (10%): How often you apply for and open new accounts.

Credit score: VantageScore

Very poor: 300 to 499
Poor: 500 to 600
Fair: 601 to 660
Good: 661 to 780
Excellent: 781 to 850

• Extremely influential: payment history;
• extremely influential: the duration and type of credit and the percentage of the credit limit used;
• moderately influential: debt/total balances;
• Least Influential: Recent credit behavior and inquiries and available credit.

Read More: 5 things to consider before sharing a credit card