Factors That Affect Your Credit Score

Real Estate Agent with Keller Williams Realty

Most people are concerned about their credit score. Some of these people have credit scores that need to be improved while others have used good practices and have great credit scores.  Having a great credit score does not occur overnight, it takes long term financial practices to get yourself to that point.  Having a high credit score can save you a lot of money over the years.  It is especially important when you want to purchase a large ticket item that must be financed.  Following is a list of factors that play into credit score and how to improve your score:

On-time payments – If you are desiring to get your credit score to 800 or above pay your bills on time every time. This is a must because this is the greatest factor in terminating your score.  One helpful aid in making this happen is to setup automatic pay or have reminders to yourself to prevent late payments.

Amounts owed – Having debt and proper management of debt is important and will help improve credit score.  Important to keep revolving debt below 30% of available credit limit.  If you desire to have a higher debt limit, ask for a higher debt limit and if granted that will change your ratio.

Credit history – Long history of good credit standing will increase your credit score. This gives lenders a better understanding how well you will repay new loans.  Also keeping accounts open in good standing and limiting credit card inquires will work to your advantage.

Account types and credit activity – Advisable to have a diversified set of accounts, but limit the number of accounts.  The ideal mix of accounts might be auto loans, student loans, mortgage, and revolving credit cards.  This will help you improve your score.  Do not take out new loans to create a mix, only take out loan if needed.

Comments (5)

Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning John. On time every time is the first step and limiting the amount of debt is second. Easy to know, so hard to practice for many. Enjoy your day.

Mar 07, 2023 06:31 AM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great post! Thanks for sharing and enjoy your day!

Mar 07, 2023 06:57 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

John, great post reminding those trying to improve their credit scores!

Mar 07, 2023 07:19 AM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
Relocation to NW AZ with elbow room & more freedom

So many are falsely encouraged to have numerous credit cards which only increase personal debt.

Mar 07, 2023 07:54 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

One of the worst things a homebuyer can do immediately after signing a contract to buy a home, is to go out and buy a new car.  More than once, I've seen buyers wobble their transactions doing that.

Mar 08, 2023 01:55 AM