Its one of the most important numbers in your financial life... your credit score. But according to new numbers from credit rating agency FICO more than 1 in four Americans have scores of 599 or lower, making them a poor risk.
That's more than 43 million Americans. And since banks are tighter with loaning money, it could mean more people will have a tougher time financing big purchases, like homes and cars.
FICO scores go as high as 850. 599 or below is a red flag.... as banks consider borrowers in that range a risk. So, what goes into your credit score? These numbers are from FICO:
- 35% payment history. Most important thing is paying bills on time. Late payments can stay on your credit history for years. Bankruptcies and foreclosures show up for 7 years.
- 30% amounts owed. The next most important factor is how much you owe. Basically, the bigger the balance, the lower your score.
- 15% length of credit history.
- 10% types of credit.
- 10% new credit. Don't try to get around it by opening up new cards... because multiple credit inquiries in a short period also dings your score.
And keep this in mind... you can't fix your credit, if you don't know what's wrong. So take a look at your credit report for negative information, and work on the things that could make your score higher. To get a free credit report go to AnnualCreditReport.com