Today we're going to be going over all of the different categories that
make up your credit score so we're going to go through each of them individually
and we're going to talk about basically the nuts and bolts of each of those categories
how much weight is actually affected on your credit score and we're going
to go through all of them so you guys can learn something new about your credit score
now there's a lot of different ways that your credit score can be broken down but the method
that I'm going to be referring to in this video is called the Vantage score 3.0 now
this was developed by all three of the major credit bureaus so it is widely used by a lot
of different lenders out there it's not to say that some of them might not use it because they
could use other methods but this is the one that I'm going to be talking about the Vantage
score 3.0 so that being said your credit score actually ranges from 300 at the very bottom and
then it can go all the way up to 850 which is the best credit score possible now in between
all of those numbers you're going to be tiered so obviously the lower range of numbers you're
going to be in the poor category and then as you move up in your score you'd move to Fair
Credit good credit and then eventually excellent credit which is where you really want to be now
I'll talk about all of the different categories that make up your credit score because as far as
the 850 points is concerned they are broken down into different categories and each of
those categories is weighted a lot heavier than others so we're going to start with the highest
tier the highest category which is your payment history and that's worth 40 of your entire credit
score so you definitely want to be on top of your payments don't make anything late
because as far as late fees go they're not supposed to be reported to the bureaus unless
they're 30 days past due but personally I would never risk that I don't want to
have a late payment on my history at all because like I said it covers 40 percent
of your entire credit score so you really want to be careful here and not to mention if you are
late on a payment your lender they can charge a late fee and that's separate from the credit
bureau so even if it's not being reported you can still pay those late fees which you really
don't want to be doing unless you absolutely have to and then I also want to mention that
if you're more than 60 days past due it's even worse for your credit score because there's more
penalties involved and also if you do have late payments on your credit report they can actually
stay there from Seven all the way to 10 years so definitely avoid late payments at all costs
now the next category that I want to talk about is called your credit history and this accounts
for 21 of your overall score so obviously it is important here that you start to build your
credit history while you're young because the longer you have that history established the
higher that that tier can be as far as your overall credit score goes so for instance if
you're 18 years old you get a credit card and when you're 28 years old and if you've
had that card open for 10 years then that's definitely going to look good on your credit
history because you've had it so long and honestly for a lot of us out there your credit history is
just going to happen naturally so for instance when you're younger you might open a credit card
eventually you might get a car loan something like that all of those types of things on your credit
are going to build that history and a lot of that just comes natural as you age and you progress
in life there's also a lot of credit cards out there that are made for people with a little to
no credit history so if you're just starting out and your credit's really low or you don't even
have any then there are credit cards out there that can help you with that now just keep in
mind you want to be responsible with your credit cards and please don't make any late payments
because remember that's 40 of your entire credit score and if you are looking for a starter credit
card I will leave an affiliate link down below for creditcards.com so you can check out some of those
available credit cards if you have an interest now as far as credit history is concerned if you
do happen to have a credit card that you don't use very much and you're thinking about canceling it
it might be in your best interest just to keep it open and use it once in a while because if you've
had that card for a very long time it is helping your credit history because I personally I had a
credit card open for 12 years and I canceled it just because I wasn't using it very often
but honestly that history could have been helping itself even more today because I canceled it about
10 years ago so that's just something to think about now the next category that I want to talk
about is called credit usage and this takes up 20 of your overall score now basically the way that I
can describe this is It's how much you're spending on your credit cards versus how much is available
so the lower amount you spend versus how much you have available is always going to be a good thing
and it's going to help out your credit score so for example if you had two credit cards and each
of those had a five thousand dollar limit then you'd have ten thousand dollars of available
credit now if you spent three thousand dollars between the two cards then that would be a thirty
percent spending rate according to how much you have available and thirty percent is actually
right where you want to be that's right at the line between where it's going to help or hurt
you so if you can keep that below 30 percent that's going to help your credit and if that's
above 30 then it's going to start to hurt your credit score so just make sure that you pay down
your credit card balances every single month because as long as you keep that nice and low
that's called your utilization score as long as it's below 30 percent then you are good to go and
you're helping your credit but if it's above that try to fix it because it is hurting your credit
score next up is called your total balances and this counts for 11 of your total credit score
now what this is is it's an accumulation of all of your loans and your credit cards so we're talking
mortgages auto loans credit cards everything like that they're all going to be lumped up and as you
pay them down slowly it's going to slowly also start to help your credit score as well so this
is called your total balances and that's basically what it is and like I said this does include your
credit cards as well so as you pay down those credit card balances it's not only helping this
category but it's also helping the other category of the credit usage as well now the next category
is called credit checks and this one really isn't a big deal because it only counts for
five percent of your total score but just keep in mind that whenever you apply for a new loan
you are going to have to have your credit checked and that can negatively affect your score if you
have it checked too many times within a two-year period because what they say is that you can have
up to two that's considered good within a two-year period anything after that it can start to affect
your score negatively but just keep in mind it's probably not going to do very much to your score
because it's only worth five percent but let's say that you happen to be shot shopping for a mortgage
and you have your credit pulled five different times through five different lenders because
you're just trying to find the best rate well that generally should only count as one inquiry
because as long as you have those checks within 14 days they say that that should only count as
one rather than a whole bunch of them because obviously they know that you're shopping around
now the last category is called available credit and this one really isn't a big deal
because it's only worth three percent of your entire score but the way that I look at it is
it's just how much do you have available in your credit line so for instance if you have
ten thousand dollars worth of credit cards and you're spending 900 then you'd have nine thousand
one hundred dollars available to you which is a good thing because it's under that thirty percent
Mark so obviously this category is also being affected by paying down your credit cards and
your loans and things like that so as long as you're getting all those things under control
getting them paid down then you're going to help that category and the other categories as well