35% impact on your credit score

Paying debt on time and in full has a positive impact. Late payments, judgments, charge-offs, collection accounts and bankruptcies have a negative impact.

If you have had any bankruptcies within the last 7 years, it will seriously affect your ability to borrow or establish new credit accounts. If you have had any judgments within the last several years, it is very important that you pay off the judgment and get a“satisfaction of judgment” from the court.

Any unsatisfied or recent judgments will make a bad dent in your credit scores and adversely affect your ability to borrow. Usually, judgments and liens must be paid prior to the closing.
Timely mortgage payments are weighted heavily by the scoring systems and are one of the most vital requirements that lenders look for when evaluating your credit history. Many times a single late mortgage payment within the last 12 months can hold up your file or spell the difference between the best interest rate and the next credit level. Your payment history on other debts (car payments, credit cards, etc.) is also given a lot of weight.

The credit scoring systems evaluate how many late payments you have had and whether they were 30, 60 or 90 days late, or whether they are currently in default, with default being the worst situation.
Additionally the systems look at whether the late payments were consecutive. If you only have one or two minor late payments on your report with no other derogatory marks, your score will not be terribly affected, but you will have a tough time getting over the critical 700 level.

Here are 4 practical steps that you can implement to improve your credit score in the area of “Payments”:

1. Make all your payments on time
2. Past dues on any account will destroy your score – bring your delinquent accounts current immediately
3. Pay your bills before they go to a collection agency
4. Check your credit report for accuracy on a regular basis; and make sure that disputed bills are not negatively affecting your credit scores.

30% impact on your credit score

Make all your payments on time. Past dues on any account will destroy your score – bring your delinquent accounts current immediately. Pay your bills before they Don’t close your credit accounts unless it is necessary to do so. It is better to have many open accounts with little or no balance than to have just one or two accounts regardless of the balance.
Don’t concentrate large balances on just a few accounts.

Keeping your credit balances below 30% of your available limit is very important. Keeping your balances at 1-3% of your available credit is even better. For instance, if you owe $10,000, and you have $100,000 of credit available to you, you are only using 10% of your available credit line.

On the other hand, if you owe $10,000 and you only have $10,000 available to you, you have “maxed out” your available credit and your credit scores will be very negatively impacted. Therefore, it is not how much you owe, but how much you owe compared to what you are able to borrow.

Here are three practical steps to improve your credit score in this area:

1. Don’t close your credit accounts unless it is necessary to do so. It is better to have many open accounts with little or no balance that to have just one or two accounts regardless of the balance
2. Don’t concentrate large balances on just a few accounts. Pay outstanding debt down as close to zero as possible, and evenly distribute the remaining balance across all your open credit lines. The key is to keep the balances at 1-3% or at the very least 30% of your available credit line(s).
3. Call your credit card companies and try to increase your available credit lines if they can do so without pulling a new credit report.

15% impact on your credit score

Don’t close your credit accounts. If you must, close the newest ones instead of the oldest ones. Your score will improve over time if you keep accounts open and use them every once in a while. Think twice before jumping on the latest 0% credit card offer or opening a new card just to get a 10% discount at a department store. The longer your accounts have been opened, the higher your score will be; newly opened accounts will bring your score down.

here are 3 practical steps for you to improve your score in this area:

1. Never close your oldest credit account, if you must, close your newest accounts first.
2. Think twice before opening a new credit line.
3. If you don’t have much of a credit history, and you are planning on taking out a mortgage in the future, it may be a good idea to establish a few open credit lines with little or no balance on them. Although newly opened accounts tend to lower your score initially, they will improve your score once they’ve been open for a while, somewhat active and paid off with little or no balance.

10% impact on your credit score

Having 3-5 revolving credit cards open is optimal. Having a good mix of auto loans, credit cards and mortgages is better than having only credit cards.

A good mixture of auto loans and leases, credit cards and mortgages is always best. Too many credit cards is not a good thing, and having a mortgage does increase your score.

Practical steps to improve your score in this area include:

1. Having 3-5 revolving credit cards open is optimal.
2. Having a good mix of auto loans, credit cards and mortgages is better than having only credit cards.

10% impact on your credit score

Multiple auto and mortgage inquiries are treated as only one inquiry if made within 45 days of each other. So, it’s better to shop for a car or a mortgage over a two week time-frame, rather than to prolong it over a longer timeframe.

Don’t apply for a lot of credit or open multiple credit cards at the same time; and If you’re thinking of applying for a mortgage within the next 90 days, it would be good to wait until after your loan closes before you apply for any new credit.

Inquiries affect the score for one year from the time they’re made. Your score isn’t impacted when you check your own report. It’s only affected if a potential creditor checks your credit. These include department stores, as well as credit card, auto finance and mortgage companies. 

Here are 3 steps you can take to improve your score in this area:

1. Multiple auto and mortgage inquiries are treated as only one inquiry if made within 45 days of each other. So, it’s better to shop for a car or a mortgage over a two week timeframe, rather than to prolong it over a longer timeframe.
2. Don’t apply for a lot of credit or open multiple credit cards at the same time
3. If you’re thinking of applying for a mortgage within the next 90 days, it would good to wait until after your loan closes before you apply for any new credit.