1. How you pay your bills (35 percent of the score)
The most important factor is how you've paid your bills in the past, placing the most emphasis on recent activity. Paying all your bills on time is good. Paying them late on a consistent basis is bad. Having accounts that were sent to collections is worse. Declaring bankruptcy is worst.
2. Amount of money you owe and the amount of available credit (30 percent)
The second most important area is your outstanding debt -- how much money you owe on credit cards, car loans, mortgages, home equity lines, etc. Also considered is the total amount of credit you have available. If you have 10 credit cards that each have $10,000 credit limits, that's $100,000 of available credit. Statistically, people who have a lot of credit available tend to use it, which makes them a less attractive credit risk.
3. Length of credit history (15 percent)
The longer you've had credit -- particularly if it's with the same credit issuers -- the more points you get.
4. Mix of credit (10 percent)
The best scores will have a mix of both revolving credit, such as credit cards, and installment credit, such as mortgages and car loans.
5. New credit applications (10 percent)
The final category is your interest in new credit -- how many credit applications you're filling out. The model compensates for people who are rate shopping for the best mortgage or car loan rates. The only time shopping really hurts your score, Watts says, is when you have previous recent credit stumbles, such as late payments or bills sent to collections.
What now? If you want to up your credit score the things that you can do to get the most bang for your buck are the following...
1. Pay your bills on time! All bills from utilities to cable bills to credit cards. You should always pay the full balance by the due date or before.
2. Pay down your debt! The debt to allowable debt ratio makes up a big part of your score.
3. If you're disciplined about spending, then call your credit card companies and ask to up the limit on your credit cards. This will increase the ratio of debt to credit that you have, thus upping your score.
4. Check your credit report at annualcreditreport.com to make sure it is accurate. Inaccuracies usually hurt your score, not help it.