Understanding Your Credit Score
Your Credit is your BIGGEST ASSET ! Here are the factors that make up your credit score:
Payment History – 35%
- Paying debt on time and in full has a positive impact.
- Late payment, judgments and charge-offs have a negative impact.
Outstanding Credit Balances – 30%
- Keep balances below 50% of limit – below 30% is even wiser. Do NOT close accounts.
- Pay outstanding debt down as close to zero as possible.
- Evenly redistribute the remaining balance among open lines.
Credit History – 15%
- The length of time a particular credit line has been opened is important. A seasoned borrower is stronger.
Type of Credit – 10%
- A mix of auto loans, credit cards and mortgages is positive- rather than a concentration in credit cards only.
Inquiries – 10%
- Don’t “over-apply” for credit.
- Auto and mortgage inquiries receive special treatment, and 20 inquiries can be made in a 14-day period and will be treated as only one inquiry.
- Each hard inquiry can cost 2-50 points on a credit score.