- Credit Life 15% – The duration of a credit agreement is scored here. In essence, the longer the credit has been established, the better your credit score in this area.
- Current Credit Type 10% – The number of loans you carry as well as available credit from credit sources determine this score. Credit performance comparisons between you and other consumers with similar profiles impact this area.
- New Credit 10% – This category reviews the number and proportion of recently opened accounts, as well as the number of recent credit inquiries. Further, consideration is given to the time elapsed since such activity.
POSTING THE FINAL GRADE
The Fair Credit Reporting Act details the businesses and persons who can access your credit report, as well as the reasons for their doing so. Your credit report can be viewed by people with whom you have initiated business, such as lenders, landlords, credit card companies, and other businesses. Each of these inquirers must have a “permissible reason” to view your report.
You can and should request copies of your credit reports from the three major credit bureaus. You will discover not only your credit score and borrowing risk, but also any errors that should be contested. Credit scores can be improved by following these guidelines.
- Pay your bills on time, every time. Make this a priority.
- Review your credit report and promptly correct any errors. Doing so can dramatically improve your FICO score.
- Don’t necessarily close old credit card accounts just because you’re not using them. Creditors look at debt-to-credit limits; so, keeping credit limits open with no outstanding debt against the credit will only help your credit score.
- Another reason to keep accounts open: creditors review the average age of your accounts. The longer the credit has been established with a good payment record, the more benefit you will gain for your overall credit score.
- Don’t “max out” those credit cards. Reduce your balances on credit cards to 75% or less of your available credit. 25% is the desired ratio.
- Don’t allow anyone to run your credit report unless absolutely necessary. Too many documented inquiries will lower your credit score.
For more information on credit report and related topics, go to www.myFico.com.
Michelle Castle provides mortgage loans to all of North Texas and Southern Oklahoma. Call Michelle Castle at (903) 892-1998 if you are looking for a home loan in North Texas and Southern Oklahoma.