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Make Good Use Of Credit

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The Associated Press

The Tampa Tribune

Published: November 9, 2008

Your FICO credit score is made up of five factors of varying importance. The weighted importance of the categories are averages. For some people certain categories may count more heavily.

Debt-To-Credit Ratio: 30 percent

This measures your outstanding balance against your available credit. So if you have a lower credit limit but your balance remains steady - it will raise the ratio and probably lower your score.

Experts say it's best to use less than 30 percent of your available credit.

Payment History: 35 percent

If you have any late payments, your score will take into account how late you were, how much was owed and how many late payments there were. If your overall report is strong, a few late payments shouldn't be a score killer.

Length Of Credit History: 15 percent

If you're closing credit card accounts, keep the card you've had the longest.

If you want to make sure your credit cards are counting toward your debt-to-credit ratio, you should use them at least once every six months.

New Credit: 10 percent

Signing up for new credit cards doesn't always boost your score because you're adding to your line of credit. Instead, it can lower your score because you may appear to be a bigger risk.

Types Of Credit: 10 percent

This looks at whether you have a mix of different types of credit. It's good to have a history of revolving accounts.

Source: Fair Isaac Corp.

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