Why is it so important?

Your credit score is the most important part of your financial future outside of liquid assets. A low credit score can be detrimental while a high credit score can ultimately change how much you pay over the course of a loan. Since a credit score is so important, it's important to know just how your score is determined. After all, knowledge is power and the more you know about your financial situation, the better you can prepare for the future.

Payment History (35%)

Your payment history makes up a little over a third of your credit score. This factor takes into account whether you pay your bills on time, how late your payments are, and whether you paid the amount in full. Developing a payment schedule and also budgeting accordingly can help make maintaining a positive payment history much easier than paying bills as they come along.

Amounts Owed (30%)

Owing money on a loan won't necessarily hurt your credit score, but having high amounts of debt certainly can. Borrowers with high amounts of debt will likely be rejected by lenders or receive high interest rates. That's not good news and it can significantly increase the monthly payment on a new car. Pay off debts as quickly as you can.

Together, how much you owe and whether you have a positive payment history make up a majority of your credit score. Take the time to budget accordingly and there's little hassle in maintaining a high credit score.

Length of Credit History (15%)

A short credit history doesn't indicate you're a high-risk borrower as long as you have a history of making payments before they're due and have little or no debt. In the same way, a long credit history doesn't mean you're a low-risk borrower if your history is marred by late payments and high amounts of debt.

New Credit (10%)

Opening several new credit accounts at once can negatively impact your credit score. Opening many new accounts indicates a borrower could be ready to take on a large amount of debt, making them a higher risk than the average borrower.

Credit Mix (10%)

A wide mix of credit accounts, such a credit cards and store accounts, can indicate a borrower is well versed in how credit works. Those with a wider mix of credit accounts are generally viewed as being responsible enough to handle making payments on time. As a result, lenders may view them favorably.

So if you have any questions, just stop on by Pegues Hurst Ford's Finance Department today!


Pegues - Hurst Motor Co

200 Spur 63 South
Directions Longview, TX 75601

  • Sales: (903) 232-2533
  • Service: (903)758-6211
  • Parts: (903)758-6211