5 Factors that Affect Your Credit Score
FICO® credit scores range between 300 and 850, with scores above 640 considered to be the minimum for obtaining most mortgages. The following factors affect your score:
1. Your payment history.
Did you pay your credit card obligations on time? If you paid late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.
2. How much you owe.
If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.
3. The length of your credit history.
In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp. You may want to think twice before closing accounts you’ve had for a long time.
4. How much new credit you have.
New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.
5. The types of credit you use.
Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.
For more on evaluating and understanding your FICO credit score, visit www.MyFICO.com as well as speak to a professional lender.
It is not advisable to contact creditors or collection agencies without first consulting with a professional lender who can guide you through the process. To obtain your free credit report allowed from each bureau each year, go to www.AnnualCreditReport.com. The three different credit bureaus and their contact information:
Equifax – www.equifax.com -1-877-322-8228
Experian- www.experian.com – 1-888-397-3742
TransUnion – www.transunion.com – 1-800-493-2392
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