How Credit Scores Are Determined

These are the components that make up your credit score. Some carry more weight than others:

  1. Payment history accounts for 35% of your score. Payment history negative items that count against your score include
    Late payments
    collections
    judgements
    bankruptices
  2. Amounts owed 30%Debt you have as compared to the amount loaned to you.
    Anything over 50% will start to impact your credit scoreWe are mainly talking about
    installment accounts
    Auto Loands
    Mortgages
    Loans with an end date or pay off dateRevolving accounts – no end date and can use the credit over and over
  3. length of credit history 15%(How long has each account been open)
    Account in good standing are those with no late payments. The
    longer the credit history the better
  4. new credit 10%When yu apply for credit (loans,mortages etc) an inquiry
    shows on your report. These inquiries stay on ypur credit
    report for two years. The first year on your report could
    impact lower your credit score.
  5. types of credit 10%A mix of different types of credit is always best.
    credit cards
    car loan
    signature loan
    mortgage

Know where you are at – get copy of your credit report and scores.  You can get free credit reports from www.annualcreditreport.com