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2) Credit & Financial Identity
Credit score mechanics
Most lenders use the FICO Score (ranging from 300 to 850). Your score is calculated using five ingredients: Payment History (35%)—the biggest factor, did you pay on time? Amounts Owed / Utilization (30%)—how much of your limit are you using? Length of History (15%)—how long have your accounts been open? Credit Mix (10%)—do you have different types of credit? New Credit (10%)—have you applied for many cards recently?
Most lenders use the FICO Score (ranging from 300 to 850). Your score is calculated using five ingredients.
- Payment History (35%): This is the biggest factor. Did you pay on time? Even one late payment can stay on your report for 7 years.
- Amounts Owed / Utilization (30%): How much of your limit are you using?
- Length of History (15%): How long have your accounts been open?
- Credit Mix (10%): Do you have different types of credit (cards, auto loans, etc.)?
- New Credit (10%): Have you applied for many cards recently?
Free Resource: Credit Score Explained
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