As a loan officer, people ask me all the time, "What can I do to increase my credit scores?"
The answer to that question often depends on what the details of their credit report shows and how long they have had credit. Those who have had credit for over twenty years or more will have higher scores than someone with only two years of credit history, assuming that the past two years of each person's credit contains no recent late payments.
The most recent two years are what weigh the most on credit scores, but a person's overall credit history has great bearing too.
35% of a person's score is determined by their track record. The payment history shows how you have handled your credit. Have you paid your bills when they were due or before? This part of the score will reflect if there are any judgements, tax liens, collections, or wage attachments.
30% of a person's score is based on how much is owed. If all of your eight credit cards are up to their maximum levels, then your scores are dramatically lower than they could be.
15% of a person's score is based on how long they have credit history. As was stated before, 20 years of good credit will help a person to bear a few dings than someone who has a short credit history.
10% of a credit score is based on the recent activity and new accounts. Inquiries occur if new accounts have been added, if a person has applied for lots of credit, and/or if you are "shopping" for various lenders.
Lastly, 10% of the score reflects the types of credit that exist on the credit report. A healthy mix of credit would be a real estate loan, car loan, and a few credit cards with 75% of their limits available.
People who know the rules of credit will get better rates and service.
Most of us need to perform regular maintenance on our credit reports. Check out my website at www.CreditFitness.net for information on improving your credit scores. Everyone needs this: if you have great credit, you need to protect it. If you have not-so-great credit, we can help with that!
