Discover what has the biggest impact on your credit score!

Credit scoring has an enormous impact on your financial picture. It can mean the difference between getting a good interest rate on your mortgage loan, or whether you even qualify at all. It is therefore imperative to be well-versed on the factors that influence your credit score, and have the ability to take simple, yet very important steps to clean up your credit. The purpose of this newsletter is to put you on the right path to obtaining a better loan at some point in the future.

We all know that good credit translates into lower rates for consumers and you need to know how to work the system to your advantage, and have a plan in place to get a better deal when things don't immediately fall into place for you.

The Five Factors
What the credit scoring model seeks to quantify is how likely you are to pay off your debt without being more than 90 days late on a payment at any time in the future. Credit scores can range between 300 and 850. The higher your score is, the less likely you are to default on your loan. Only one out of approximately 1,300 people has a credit score of 800. These are clients who walk away with the best interest rates. On the other hand, one of eight prospective home buyers are faced with the scenario that they may not qualify for the loan they want because they have a lower score, between 500 and 600.

Here is a simple chart to give you the tiering structure and what it means to the lender.

720-850	You are at the top of the best rates and terms offered to you.
700-719	Excellent score. You are very desirable borrower.
680-699	Good Credit. You should be in good shape to buy.
660-679	Ok credit. Don't look for other exceptions.
640-659	Borderline. Ok if everything else is wrong.
620-639	Weak. The rest of your life must be perfect.
600-619	Difficult. Needs some work, or a special program.
Below 600	Trouble! Try to fix up your credit immediatelly!

Your credit score comprises five factors and I listed these below in order of importance, just as lender will see it:

Payment History: 35% Impact. Paying debt on time and in full has a positive impact however late payments, judgments and charge-offs have a negative impact. Missing a high payment has a more severe impact that missing a low payment.

Outstanding Credit Balances: 30% Impact. The ratio marking the difference between your outstanding balance and your available credit is important here. Ideally, you should keep your balance below 10 percent of your available credit limit.