In any type of school in which a GPA is given, there are classes taken that affect your GPA. Whilst your GPA shows how well you did in school overall, the grades in the individual classes that you took show specifically how well you mastered the material taught in that class. When applying for college, for a job, or for graduate school, the admission officer or possible employer first glances at your GPA; this glance at the GPA ends up being like a screening tool. Those who do not have a high enough GPA are automatically disqualified, and those who have a higher GPA are looked at more closely.

This same type of analysis can be given to your credit score. When you are trying to obtain a loan, or a new type of credit, the creditor first will look at your credit score (your “credit GPA”). If your credit score is too low, you will have no chance in obtaining credit. However, if your score is high enough, the creditor can then further analyze it. Some may look more heavily at specific aspects of your credit score, such as your payment history, or your outstanding debt, whilst others may find the length of time you have had credit as more important. However, there are 5 different factors that contribute to your credit score, much like how classes contribute to your GPA.

1. First is your payment history. If you have had past problems in making your payments, the creditor will analyze the magnitude of the problems based on how long it has been since you missed a payment, how many payments you have missed, and the overall amount of money in the payments you have missed. For example, if you missed a payment for $200 three years ago, it is not as bad as missing a payment of $100,000 yesterday.

2. Second is your outstanding debt. In order to obtain a high credit score, it is a good idea to maintain each one of your cards below 25% of its limit. Someone with outstanding debt is much less attractive to the aspiring creditor.

3. Third is how long you have had credit. Someone who has had good credit for a long time appears much more appealing then someone who has only had good credit for a year. A more extensive credit history makes you a more attractive candidate for loans.

4. Fourth is how recently you applied for new credit. Your score will be lowered if you have recently applied for new credit because this implies that you have “needed” money recently.

5. Fifth are the credit you currently have, and its types. If you have credit accounts from a variety of sources; such as from both revolving and installment loans, you will have a higher score. This shows that you have experience dealing with different types of credit.

All of these factors contribute, though not equally, to your credit score. If you need help boosting your score, or are worried about your current score, Vivix Credit Solutions can help you manage your credit score so you can build or maintain a positive credit profile.