Watch how many credit cards are in your wallet when it comes to your credit score. (photo by sanja gjenero)
When it comes time to buy that new home, car, insurance, or just about anything in today’s world the company will want to run a credit check.
Your credit score will range between 450-850 with the higher the number the better.
Your credit score is made up of:
- 35% — Payment History. Pay bills on time or delinquencies will affect your score with more weight placed on current pay history.
- 30% — Capacity. Your available credit.
- 15% — Length of Credit.
- 10% — Accumulation of debt in the last 12-18 months. How many inquires and opening account dates will affect your score.
- 10% — Mix of Credit. Installment debt (a mortgage for example) raises your score and revolving credit lowers it.
Your credit score will improve, when you take control of your debt by doing a few things:
- Pay down credit cards
- Do not close credit accounts because capacity will decrease
- Always make payments on time. Older late pays will less will become less significant with time.
- Slow down on opening new accounts.
- Acquire a solid credit history with years of experience.
- Move revolving debt to installment debt.
- Do not allow collection accounts to go unpaid.
photo by Steve Woods
By the contrary, your credit score is not affected by your debt ratio, income, length of residence, or length of employment.
We’ve talked about what will help your credit and what won’t affect it. So what will hurt your credit score?
- Missing a payment will take 24 months to restore credit from one late payment.
- Maxing out your credit cards.
- Closing Credit Cards Out, this will lower your available capacity.
- Shopping for credit excessively.
- Opening up numerous accounts in a short amount of time.
- Borrowing from finance companies.
- Collection accounts now report as rolling late payments.
Don’t forget to control your credit score by keeping track of your credit report, free once a year, at AnnualCreditReport.com. This is the government’s site for the free report, don’t be fooled by the ads with the “catchy jingles” that are not truly free.
Information courtesy of National City Mortgage and Nancy Garrabrant.
[...] See the original post: Controlling My Credit Score in Delaware [...]
I didn’t know the percentages/proportions that make up a person’s credit history. Thanks for that info. I’m pretty sure credit cards are what commonly puts people debt, so this is something worth sharing and reading for everyone here and abroad.