Credit Scores & Reports
Keeping track of your credit report is a smart move. Not only can it help alert you of possible identity theft, it’s also a way to make sure your information and credit history are correct–which is especially important if you’re about to apply for a loan.
What determines your credit score?
35% Payment history (ie on-time payments, or delinquencies
30% Current payment history weighted more heavily
15% Capacity (Capacity is King)
10% Length of credit
Accumulation of debt within the last 12 – 18 months
Number of Inquiries
10% Mix of credit
- Installment (debt can raise) vs. revolving (debt can lower)
- Finance company loans (can lower score)
- How can you improve your score?
- Pay off or pay down on your credit cards
- Do not close credit card accounts because capacity may decrease
- Move your revolving debt into installment debt
- Continue to make payments on time (older late payments will become less significant with time)
- Slow down opening new accounts
- Acquire a solid credit history with years of experience
What actions will hurt your credit score?
- Missing payments (regardless of dollar amounts – it can take up to 24 months to restore credit with one late payment)
- Credit cards at maximum capacity (maxing out credit cards
- Shopping for credit excessively
- Opening up numerous trades (credit lines) in a short time frame
- Having more revolving credit debt in relation to installment credit debt
- Closing credit card accounts (this could lower available capacity)
- Borrowing from finance companies
What does not affect your credit score?
- Debt ratios
- Length of residence
- Length of employment
Approximate credit weight for each year:
40% Current to 12 months
30% 13 – 24 months
20% 25 – 36 months
10% 37+ months
As an American consumer you’re entitled to one free credit report per year, from each of the big three consumer credit bureaus (Equifax, Experian and TransUnion). That’s right; it’s free. So really, there’s no reason not to give them a call.
Annual Credit Report Request Service
You can order a credit report from one or more national consumer reporting companies through the Annual Credit Report Request Service.
P.O. Box 105281
Atlanta, GA 30348-5281
You can receive one credit report per year at no charge by visiting: AnnualCreditReport.com, to order your credit reports directly, call 1.877.322.8228