April 14, 2008
More and more today you are hearing about the credit crisis. So, in a world where credit may be limited, it is more important than ever to know what impacts your credit score. After all, your credit score will help determine how much credit, and at what rate, will be extended to you. So, know the 5 Factors.
1. Payment History 35%. Paying debt on time and in full has a positive impact. Late payments, judgements, and charge offs have a negative impact. Missing a high payment has a more severe impact than missing a low payment
2. Outstanding Credit balances: 30%. The ratio marking the difference between the outstanding balance and the available credit is important here. Ideally, you should keep your balance below 10% of the available limit.
3. Credit History: 15%. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area. Keep that one credit card that you have had for 10 years, keep it current, and the balance below 10% of your limit!
4. Type of Credit: 10%. A mix of auto loans, credit cards, and mortgages is more positive than a concentration of debt from credit cards only. Be wary of the “save 10% with this purchase if you open a credit card” from your local retailers.
5. Inquiries: 10%. This quantifies the number of inquiries that have been made on a consumer’s credit within a six month history. Each hard inquiry can cost from 2 to 50 points on a credit score, but the maximum number of inquiries that will reduce the score is 10.The credit bureaus are known to change just what impacts your score, so keep an eye out for future blogs about credit and what effects your score.Mike Quigley
Mortgage Consultant
Coastal States Bank
Office: (843) 837 -0169
Fax: (843) 689-7852
Posted on April 15th, 2008 by Donna
Filed under: Mike Quigley - Coastal States Bank
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