Five Credit Score Factors You Need to Know

In order to rebuild your credit  you should have an understanding of how your credit score is developed.

Here is an outline:

1. Payment History: 35%
   This category includes payment history information about several different types of accounts such as credit cards, retail accounts and installment loans.
2. Capacity (Amount You Owe): 30%
   The FICO scoring model weighs capacity heavily because it knows that the many of Americans who go bankrupt charge up their cards to the limits before they file. (FICO is the name of the company that crafted--and computes--credit scores.)
3. Length of Credit History: 15%
   Even if you no longer want an older account you should think twice about closing it. Lenders are looking for borrowers with long credit histories.
4. Types of Credit: 10%
   This category looks at the overall mix of credit such as credit cards, mortgages or consumer finance accounts.
5. New Credit: 10%
   Approximately 10% of your credit score is based on how many recent new accounts you have established.