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Credit Score - Bakersfield, CA

What Determines Your Credit Score?​ | Bakersfield, CA

A credit score is a numeric value that’s used to determine your creditworthiness. In other words, this score shows banks and other financial institutions the risk involved in lending you money. This number can range anywhere from 300 to 850, and there are a range of things that can determine this rating. Read on to see a breakdown of the factors that contribute to your credit score.

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Payment History


This is about 35% of your total score. Payment history is essentially payment information. If you miss payments or declare bankruptcy, for example, these can negatively affect your payment history. However, if you pay your bills on time for years, then your credit score is likely to improve.


Amounts Owed


The amounts owed makes up about 30% of your rating. This includes both individual accounts and the total amount you owe. While it is actually good to have some debt (as long as you don’t miss payments), too much debt can dissuade banks and other financial institutions from giving you additional money.


Length of History


Accounting for 15% of your credit score, length is actually an important factor. It’s important to show that you’ve been in the game for a while, and that you can handle long-term debt. For example, if you’ve consistently payed off a car payment for five years without missing a payment, it’s bound to impress creditors.


New Accounts


This only accounts for 10% of your rating. If you have a string of new accounts on your credit history, banks may be wary that you are accumulating debt too quickly. It’s best to spread out lending if possible. For example, your credit score will likely dip if you buy a house, two cars, and jet skis all on credit in the same month.


Types of Credit


Finally, the type of credit matters as well. This makes up roughly 10% of your score, and it can be affected differently by distinct accounts. A mortgage is very different than revolving credit (i.e., a credit card). Retail accounts and installment loans also affect your score differently. Long-term, steady payments tend to look better than small, impulsive buys.

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These are the main factors when it comes to your credit score. Credit history, amounts owed, the length of credit history, new accounts, and the types of credit each affect your rating. Learn more about financing by stopping by Bakersfield Mazda. If you’re worried your credit isn’t good enough to get a vehicle, let our experts work out a monthly plan that fits in your budget.

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