Figuring Out the Ever Nebulous Numbers Called "Credit Scores"

Credit Score Factors

The information contained on our credit reports impact every facet of our lives; including employment, insurance, and even interest rates (mortgage, credit cards, automobiles, etc.). There is specific information captured on our report which is used to constitute our credit score:

• Payment History (accounts for approximately 35%)

• Outstanding Debt (accounts for approximately 30%)

• Length of Credit History (accounts for approximately 15%)

• Types of Credit Currently in Use (accounts for approximately 10%)

• Recent Inquiries (accounts for approximately 10%)

Payment History – Your payment history includes the following types of specific
Information:

• Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)

• Adverse populace records (bankruptcy, judgments, suits, liens, wage attachments, etc.), aggregation items, and/or delinquency (past owed items)

• Badness of delinquency. The more than recent the problem, the larger the impact on your credit score.

• Amount past times owed on delinquent accounts or aggregation items

• Time since and frequence of past owed points (delinquency), adverse populace records, or aggregation items

• Number of past owed points on file

• Number of accounts paid as agreed

Outstanding Debt – Your credit score is adversely affected if you owe amounts at or near your credit limit, so if possible, split the balance and transfer some of the debt to a second card. A low balance on two cards is better than a high balance on one. (Credit card companies usually charge a ‘transfer’ fee, but ‘reward’ you for switching you debt by offering a low interest rate. Sometimes the interest rate offered is for an introductory time period only, so do certain you read the mulct black and white before transferring your debts.)

• Amount owing on accounts

• Amount owing on specific types of accounts

• Lack of a specific type of balance, in some cases number of accounts with balances

• Proportion of credit lines used (proportion of balances to number credit limits on certain types of rotating accounts)

• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History – The longer you have got maintained your accounts, the better it reflects on your credit report.

• Time since accounts opened

• Time since accounts opened, by specific type of account

• Time since account activity

Types of Credit in Use – Loans from finance companies generally lower your credit score. According to FICO, this is heavily relied upon when there is small other credit history upon which to alkali a score.

• Number (or amount) of different types of accounts (i.e. installment loans, credit cards, retail accounts, mortgage, consumer finance accounts, etc.)

Recent Inquiries on Your Report – Recent applications for respective new accounts may negatively impact your score. If you inquire about particular publicities it makes not impact your credit report.

Now that we cognize what factors the credit bureaus see when calculating your credit scores, you might be saying to yourself... yeah, yeah, I've heard all that before. State me something I don't already know, like how I can raise my score!

With that idea in mind, wage your measures on time. If you have got recent late payments on your credit report, lenders position this as you larger credit risk. When you get your bills, don't allow this sit down on your kitchen tabular array collection dust. Keep a log of your current measures by owed day of the month and the sum amount due. Having a late payment look on your credit report today can have got a larger impact on your credit score than filing bankruptcy five old age ago!

Manage your credit effective, and don't say... "Duh, that one is obvious". I am definitely stating the obvious here. However, one of the most common ways for consumers to get into a downward spiral credit wise is the poor picks we all have got made using the unsecured part of our credit; CREDIT CARDS. Credit cards make offer contiguous relief (or often time’s instant gratification) to our needs (or wants). Don't travel out purchasing extravagance points if you don't have got cash readily available to pay for those points when the measure come ups due. That agency saying "NO" to plasma silver screen TV’s, new furniture, Gucci watches, and all the points that we "simply can't dwell without".

Anytime you run a balance on an unsecured credit card or line of credit, it have an impact upon your credit score. By focusing on keeping the balance you carry on your credit cards / lines of credit to less than 25% of your sum line of credit, you will be in better form regarding your credit score.