Credit Score Secrets REVEALED
The mysterious Black Box opened...
What you will learn in the next few paragraphs, is probably 75% of what you need to know to take more control of your credit score.
Credit scores typically range from 300 to 900. Depending on the bureau, most people score between 680 and 720. If you are above 720, congratulations! You are doing a very good job of managing your credit. If you are below 680, you have a little more room for improvement.
In most cases a credit score of 500 is the absolute lowest score that will qualify for a mortgage - and at a much higher interest rate. The good news is, everyone can improve their score. And although it takes some patience and perseverance, it is easier to do than you might think.
YOU JUST HAVE TO KNOW HOW THE GAME IS PLAYED.
In a nutshell, here is how your score is determined:
Your payment history accounts for about 35% of your score. Typically, a 30-day late payment last month will count more than a 90-day late from three years ago. Bankruptcy, court judgments, collections, and liens will also have a large impact on this percentage of your score.
The amount of credit you are currently using accounts for about 30% of your score. Your score is calculated instantaneously each time your credit is pulled. So, regardless of whether or not you pay your balances off each month, you are dinged for the amount shown on that account until the next update. In other words, it is not necessarily a good idea to run your cards up and down each month. Pay cash for whatever you can. This is calculated as a ratio of each credit limit, so try not to exceed 50% of any credit limit in any given month.
Your length of credit history accounts for about 15% of your score. Basically this is determined by the average age of all of your accounts. Accounts with higher credit limits have more weight. The assumption is that the longer you have had credit, you more likely you are to use it responsibly.
The different types of credit you have accounts for about 10% of your score. It is good to have a little bit of everything - credit cards, auto loans, installment loans, and mortgages - but not too much of any one thing.
The amount of credit you have recently applied for accounts for about 10% of your score. Each time you apply for credit, the lender makes an inquiry to at least one credit bureau. Each inquiry goes on your record and can have a detrimental effect. Typically, multiple mortgage or auto loan inquiries within a short time frame will have a minimal impact on your score. Revolving account inquires will hurt the most. Insurance company inquiries have no effect.
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- How to raise your credit scores
- How NOT to raise your credit scores
- And much, much more...
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