Credit scores are decisive aspects of our fiscal lives. Having a high score can assure that you will be able to acquire credit and have a more constructive interest rate, while if you have a lower score you may not be able to acquire credit at all.

As important as credit scores are in our society, very few people understand what determines a credit score. It is more than just paying your bills on time every month.

But payment record is the largest proportion of a credit score at 35%. Paying your bills on time with no late payments is the best way to improve your credit score.

The next factor is the amount you owe compared to the credit you have available. This counts for 30% of the score. You need to not borrow any more than 35% of the whole you have available or it will count against you. The more you use the poorer your score.

Next is the duration of credit history at 15%. The longer your accounts have been open, the better for your score. Use your older credit cards more frequently because the longer the credit history is the superior your credit score.

Next up is new credit. This includes any inquiries. Every time you ask for credit and they run a credit report you get an inquiry on your report that will last for at least 2 years. New credit also includes any new credit that you have acquired.

The last 10% of your score is the category of credit that you have. Installment accounts, which have a definite payment date and ending date are scored higher than revolving accounts which are variable on payments and do not have an finish date. Also department store cards are scored lower than ordinary credit cards.

That is all of the factors of a healthy credit score. As you can see you must pay your bills on time but it is also significant to ration the amount of credit that you use, avoid applying for avoidable credit and create a reliable credit history.