Several factors come into play when considering what affects your credit score. If you’re in need of credit repair focusing on these factors can get you back to where you want to be. There are five primary things that affect your score: payment history, credit utilization, length of time credit files are open, credit mix, and credit inquiries. If you’re in need of credit repair, credit repair companies can help make a plan to address all 5 of these areas.
Your Payment History
Just one late payment, collection account, judgment or tax lien reporting can lower your credit score 60 to 100 points or more. This component is probably the most important of all five factors. Good payment history indicates that you’re trustworthy to make payments no matter what life throws at you. It’s an indication of your resolve to keep your contract. Lenders know life throws challenges at people, and if you can show that you’re always able to make your payment no matter what happens, at the end of the day, it’s what lenders care about most.
High balances on credit cards will lower your credit scores. Pay down the balance to improve you scores, but don’t close them. “Credit utilization” is the ratio of your credit card balances to credit limits. If your balance is $200 and your credit limit is $1,000, then your credit utilization for that card is 20%. Keeping your utilization ratio below 30% is best.
Length of Time of Your Credit Files
Leave your accounts open as long as possible. Closing a credit card account that has been open for several years could lower your credit scores. If you’re able to successfully manage an account for multiple years, it signals lenders that you’re capable of managing credit. Even if you’re not using a card, having the balance paid off and keeping it open will help your credit utilization score.
The credit score prefers to see a mix of credit including a mortgage loan, installment loans and credit cards. However, you do not need a mortgage loan to have a good credit scores. When you show lenders that you’re able to successfully manage a variety of different types of loans it adds to your credit worthiness. It shows that not only can you qualify for different types of loans but you’re able to pay them on time and balance your responsibilities.
Avoid applying for department store credit cards just to get their “discount of the day.” This lowers your credit score. The rating agencies view opening multiple accounts in a short period of time as representing a greater credit risk. However, keep in mind that multiple inquiries over a 30-day period from auto, mortgage or student loan lenders count as only one inquiry toward your credit score.
When you’re working to repair your credit keep these five factors in mind and it will serve you well. Aside from these there are several other strategies you may use to get back on track with your credit. The best way to take full advantage of all your options is to work with a trusted credit repair company. Give us a call today and we’d be more than happy to start discussing your options to expediting your credit repair. 1 (877) 772-7312