5 Things To Look For on Your Credit Report

Acquiring your credit report is a great first step towards improving your credit score! If you find your credit report confusing and you're not sure what to look for, we have some great tips for you! Here is a list of 5 things to look for on your credit report.

1. Usage Percentage

- Your usage percentage is the amount of credit you've used compared to the amount of credit still available to you. For example, if you have two credit cards with limits of $5,000 each and you have a balance of $500 on one and $1500 on the other, your usage percentage is 20%. Keep your usage percentage below 30%, as this tells lenders you're able to responsibly manage credit products without drowning in debt.

2. Average Account Age

- The average account age is determined by taking the average of all of the credit accounts you currently have open. If you have any closed accounts or loans that are paid off, they will not contribute towards your average account age. The older your average account age is, the better it is for your credit score. This is why it's important not to close old accounts that are in good standing.

3. Credit Mix

- Your credit mix refers to the different types of credit accounts you have open. There are several different types of credit including revolving, installment, and mortgages. A loan would qualify as installment credit, as it's something that you borrow once and then pay off each month. A credit card would be an example of revolving credit, and we all know what a mortgage is. The more variety of credit you have, the better it is for your credit score.

4. Length Of Credit History

- Length of credit history is different than your average account age. It takes into account credit products that are no longer open or active. A long credit history does not necessarily mean a better credit score. It won't be of any benefit if your history is riddled with collections debt and defaulted payments.

5. Inquiries

- Inquiries are when potential lenders check your credit score. If you apply for any sort of credit, a loan, mortgage or credit card, you'll see an inquiry on your credit report. Applying for too many credit products in a short period of time will negatively impact your score and make you appear desperate. You should take note of how may recent inquiries there are. You might want to wait a while before applying for any new credit.

Your credit report might seem complicated, but remember that as long as you work hard to keep all your credit accounts in good standing and make your payments on time, you'll enjoy a strong score!

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have you ever encountered anything unexpected on your credit report? Let us know in the comments!