Five factors will influence that all important credit score and hence determine the amount lenders will make available to you and the interest rates and payments on mortgages, credit cards, auto loans, insurance policies, and more.
Be aware of what your credit score is! Before taking action to raise that credit score it is essential to know where it stands now and having the ability to monitor how it changes over time is very important as you will know how you financial actions affect the score and you can also check how good your position is when looking for a loan or mortgage. Knowledge is power and it is always best to know your financial position so you can also know how much you need to improve it.
Know what influences your credit score:
Payment history (35%)
This is the most important factor of your score. Raise your credit score by making payments on time. The more recent the late payments the more they affect your score, so you won’t be punished for late payments forever, but it is important to now start making payments on time in order to maximise your score.
Revolving credit balances to maximum limits (30%)
This is the second biggest factor, basically your score is influenced by how much available credit you have compared to how much you have you used. Having all you credit cards or credit account maxed out will negatively affect your score, as will having all your credit paid off. This is because credit bureaus need to see how well you manage your finances, thus it is best to aim for a 20-40% ratio, i.e. if you have a $1000 limit aim to have $200-$400 balance. If you have borrowed more than this percentage of your limit aim to pay off your balance so it is at the 40% mark, or call your bank to see if you can raise your limit.
Length of credit history (15%)
The longer you pay your bills on time the better your credit report will become. When using a credit card it is best to use it periodically and make sure you can pay off the amount on time. A good payment history on an account which has been open for a long time is a sure fire way to boost your credit score.
New credit and enquiries (10%)
Opening many new accounts negatively affects you credit score, as firstly we now know that established accounts are better and secondly lots of enquiries from lenders over a short period of time doesn’t look good on a credit report. However this does not mean that you shouldn’t shop around when looking for a loan or mortgage, enquiries made within the same 14 day period are treated as one enquiry so you can still compare lenders and find the right deal for you.
Types an mixture of credit (10%)
It is best to have a good mix of credit e.g. a mortgage an auto loan and 3 credit cards rather than many credit cards and nothing else.
Author: Bryan Shepard

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What Affects your Credit Score4.5625Richard Murphy2010-12-09 06:47:34Five factors will influence that all important credit score and hence determine the amount lenders will make available to you and the interest rates a…
What Affects your Credit ScoreFive factors will influence that all important credit score and hence determine the amount lenders will make available to you and the interest rates a…