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5 FACTORS THAT DECIDE YOUR CREDIT SCORE

November 17, 2013 Leave a comment

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history. 

2. How much you owe.  If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits. 

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly. 

5. The types of credit you use. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example. 

For more on evaluating and understanding your credit score, visitwww.myfico.com.

 
 
Categories: Finance Tags: ,

Seven ways to build up your credit score to be eligible for the best interest rates.

February 13, 2013 2 comments

Credit score requirements for loans are higher than they have been in the past, so a good credit score is more crucial than ever. In today’s economy most lenders are looking for credit scores of 720 or higher to secure a low mortgage rate. Here are seven ways to build up your credit score so you can enjoy the best interest rates available.

Request your credit reports and assess the situation. Credit bureaus (www.experian.com, http://www.transunion.com, http://www.equifax.com) are required to provide you with a free credit report every year. Nationwide consumer reporting companies get their information from different sources, the data in your report from one company may not reflect the same data in your reports from the other two companies, so request all three.

Check to verify all of the information is correct. If there are any errors, contact the bureaus immediately.

Your payment history accounts for 35% of your score, so make sure payments are on time every month.

The amount owed is 30% of your score. A good rule is to use less than 10% of your credit available on each individual card.

The length of your credit history accounts for 15%, so maintain your accounts instead of closing them. You are not penalized for available credit.

New credit is 10% of your score and every time you apply for credit an inquiry is added to your report, which drops your score.

Types of credit used accounts for 10%. Installment loans like vehicle and personal loans demonstrate you can manage various long and short-term credits.

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