Learn How to Build Business Credit

What Goes into a Credit Score

Whether looking to get a car loan or finance the purchase of your first home, a lender will want to know your credit score and what’s in your credit file.  It’s a lot easier to build or repair a credit score once you know what goes into it.
Ever wonder what goes into a credit score?



Payment History. The single most important thing a young adult can do to build or rehabilitate a credit score is to make payments on time–whether it’s a utility payment, rent payment, credit card payment, or whatever other payment you’ve taken on.


Amounts Owed. Since how much you owe on your current accounts impacts your ability to take on new payments, this factors into your credit score. Eliminating unnecessary revolving debt can boosts your score.


Length of Credit History. This is the one criteria we have little control over.  It’s like applying for your first job – – you can’t get a job because you have no experience but you need a job to gain experience. A credit score is, at least in theory, a measure of how likely you are to pay back a loan or maintain periodic payments. Potential lenders, therefore, take into account the length of your credit history. Showing the ability to make regular payments over long periods of time will improve your score.  When starting out it can be difficult to obtain credit so knowing which lenders can aid in building your credit file is key.


New Credit. Nobody wants to lend money to someone who’s on a spending spree. Opening new accounts and having numerous credit inquiries are indications that new debt may be added soon.


Types of Credit. Types of credit include installment loans, retail accounts, credit cards, finance company accounts, and mortgage loans. Lenders want to gauge your ability to pay back different types of credit. This makes up a small percentage of your score.


Finances Under Construction specializes in helping young adults build wealth and establish themselves financially. So if your credit score is not where you want it, book a free consultation today to discuss your needs.