One of the things that blows away the minds of some of my clients is how their credit scores are lower than they expect. These are people who have never had a late payment a day in their life. Yet, by score alone, you'd never think that. I'm sure there are some of you that have that same issue: perfect payment history, but not a credit score you'd consider perfect. Let me explain why.
While late payments and derogatory accounts have an impact on your score, so do many other factors. Here's a breakdown on how your scores are computed and what you can do to help raise your own credit scores.
- Payment History accounts for 35% of your score. Definitely the most impacting aspect of credit scoring.
- 30% of your score is determined by your balance ratios. This is the biggest obstacle that most people have. When your balances are greater than 50% of your available credit, your scores take a hit. If you want to have higher scores, make sure you keep your balances as close to zero as possible.
- The length of your credit history makes up 15% of your score. The older the account the better the impact to your score.
- Types of credit account for 10% of your score. The credit bureaus want to be sure you have a good mix of loans and credit.
- New credit makes up for the last 10%. Opening too many new accounts at one time is not good. Take your time when you acquire new accounts. Limit credit inquiries.
If you have questions regarding your credit, let me know. With extensive experience in credit repair, I can help you get your scores where they need to be so you can get that loan you are searching for.