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So what weight do the credit companies give to your payment
history, debt, length of credit and the other factors. Remember these are
approximates but if you go by these figures or strive to reach them you will
have a good credit score.
All The Information You Need Is In Our Credit Secrets Bible
Credit Account Mixture
This is the mixture
of the different types of credit you have. For example: You have a car loan, a
house payment two department store cards and two credit cards. This shows the
grantor that you have good debt management skills. Many people believe the
myth that you have to have a house payment to have a great credit rating. That
is not true. If you have a good renters history it is just as valuable as a
house payment. This category use 7 to 10%.
Length of Credit History This of course favors those
who are older. However the young person who has kept up with there bills and has
no late payments, judgments or repositions can have a excellent credit score in
four to six years.
Even though the specific equation for coming up with your credit score is
proprietary information owned by Fair Isaac, we do know what information is used
to calculate your score.
Payment History is 35%
Lenders are most concerned about whether or not you pay your bills. The best
indictor of this is how you’ve paid your bills in the past.
Late payments, collections and other adverse information affect your
credit score. The more recent the adverse information the lower your score. The
information does not have to be accurate to lower your score. Up to 40% of all
credit report information is inaccurate.
All The Information You Need Is In Our Credit Secrets Bible
Debt Level is 30%
The amount of debt you have in comparison to your credit limits is known as your
debt to credit ratio. The higher your credit ratio, the closer you are
to your limits, the lower your credit score. . Keep your credit card
balances at about 30% of your allowed credit.
Length of Credit History 15%
Having a longer credit history is favorable because it gives more information
about your spending habits. It’s good to leave open the accounts that you’ve had
for a long time.
Inquiries are 10%
Each time you make an application
for credit, an inquiry is added to your credit report. Too many applications for credit can
mean that you are taking on a lot of debt or that you are in some kind of
financial trouble. While inquiries can remain on your credit report for two
years, your credit score calculation only considers those made within a year.
Mix of credit is 10%
Having different kinds of accounts is favorable because it shows that you have
experience managing a mix of credit. This isn’t a significant factor in your
credit score unless you don’t have much other information on which to base your
score. Open new accounts as you need them, not to simply have what seems like a
better mix of credit.
All The Information You Need Is In Our Credit Secrets Bible |
