>> WID Financial Llama: Second Most Important Factor in Your Credit Score
The WID financial llama is on screen broadcasting from his elegant living room.
>> Hello friends and welcome to another episode of me the WID financial llama we’ve been talking about the different elements that go into your credit score and today we’re going to talk about the second most important factor: your credit utilization rate.
Basically the amounts you owe on open credit accounts.
>> Your credit utilization score measures the amount of debt you have compared to your available credit.
So let me give you an example… let’s say you have $10,000 in available credit from a credit card, $1000 would be a 10 percent utilization rate, $9,000 would be a 90 percent utilization rate.
>> Credit reporting agencies look at this number to see how financially stressed you are and it affects your score.
Keeping your credit utilization rate somewhere between 15 and 25 percent is optimal for your credit score.
>> Close-up view of a beautiful golden retriever sitting next to the llama’s desk.
So between payment history being 35 percent and your credit utilization rate being about 30 percent, that’s like 65 percent of your score.
>> Cut back to the llama.
Exactly these are the big two things to really pay attention to.
>> 65 percent of your score right there, between paying your bills on time and making sure you don’t carry too much debt.
So join us in our next episode and we’ll talk about the third most important element in your credit score.