It is possible that you don't know your credit score if credit has never been used before. This is why it's so important to quickly learn how to build credit. There are many steps you could take to build credit. First, establish credit history. In most cases, you will need to open a credit or two.
Credit mix
It is important to consider the credit mix in determining your credit score. The percentage of revolving credit versus installment credit is a major factor in your overall credit score. Your credit utilization is also a key component of your credit score. Your credit utilization percentage is lower if you have a mixture of revolving, installment, and other accounts than if only you have installment accounts.
Payment history
Your payment history is one of the most important parts of credit scores. Your payment record shows lenders how regularly and reliably your payments are made. It is vital to your credit score, as late or missed payments will lower your score. There are ways you can improve your payment history.
Credit utilization
Credit utilization percentage refers to the percentage of credit used against total credit. It's calculated simply by adding your current balance to your total credit limit for all accounts. This information is usually found by logging into your credit cards account. Bankrate.com offers a credit usage calculator which can be used to calculate it. You can calculate your credit utilization by taking a $500 credit card limit of $5,000, and spending $500 on it.
Credit history length
Credit score is affected by the length of your credit history. It accounts for 15% of your overall score, but other factors are also considered. Your credit history is more important than your score. Lenders prefer to offer loans to customers with a longer credit history.
Rate of interest
If you're new in the world of credit, it might be tempting to ask, "What credit scores do you need?" FICO and VantageScore are able to give you a score of 300. However this is rarely the starting point. It's possible that your initial credit score will hover around 500. Your credit score will increase quickly as you are a responsible credit-user.