Understanding Your Credit Score
Credit scores are big part of the lending decision.
This score is a number that tells a lender how likely an individual is to repay a loan or make credit payments on time. Your score is not a singular piece of information – it considers both positive and negative information that is reported. Late payments lower your score, but a history of on-time payments will raise your score.
This accounts for 35% of your score and is determined by Payment History. The first thing any lender would want to know is if you paid your past credits on time.
Approximately 30% of your score. Having accounts and owing money on them does not make you an at-risk borrower. Owing alot of money on alot of different accounts may mean you are overextended, and may have more difficulty making payments on time
Length of Credit History
Approximately 15% of your score. In general, a longer credit history will increase your score.
Approximately 10% of your score. People tend to have more credit today and continually shop for more – hey, we get offers in the mail all the time, so why not? But opening several credit accounts in a short period of time represents a greater risk.
Types of Credit In Use
Approximately 10% of your score. The score will consider the mix of credit cards, retail accounts, installment loans, car loans, finance company accounts and mortgage loans.
You should also look at and maintain the personal information on the credit report, such as your social security number, birthdate, and current and past addresses.
Find out the components of how your credit score is determined in this report: Understanding Your Credit Score. Included in this report are steps to dispute any information that is not correct – giving sample letters, addresses and phone numbers.