Credit scoring

There are 5 factors that affect your credit score:

• 35% – Payment history
• 30% – Credit card balance to credit limit ratio
• 15% – Length of credit history
• 10% – Credit pulls in the last 12 monthss
• 10% – Use of different types of credit

PAYMENT HISTORY – Do NOT pay any bill more than 30 days late that appears on your reports. The last 2 years of payment history holds the most weight in this portion of your score. A recent late payment can drop a score 80-100 points the next month it reports to the bureaus.

CREDIT CARD BALANCE TO LIMIT RATIO:

Best score – below 30% balances
Scores lower – between 30-50%
Very negative scoring – balances 50% or higher compared to limits

LENGTH OF CREDIT HISTORY – The longer your average account has been open, the better your score. When you open new accounts it lowers your score by bringing this average length of credit history down.

CREDIT INQUIRIES/PULLS – This comes from the # of times your credit has been pulled over the last 12 months. It has been said that you get 3-4 pulls per year without any impact. Any more and it looks like you are trying to run up debt and can count toward 10% of a credit score.

MISCELLANEOUS/VARIETY OF CREDIT TYPES:

– Revoling Credit – Credit cards are called “Revolving Debt” and are debts that continue for decades with no end on the account planned.
– Installment loans –  Debt Car loans and student loans are types of “Installment Debt” and have a finite length (like a 5 yr car loan is paid in full after 5 yrs of payment).
– Mortgages – This is probably the most important of the three.

This part of your credit score is based on you being able to show the ability of proving you can pay a ‘variety’ of different types of debt/credit.  Having all three of these, paid on time for 7 years, seem to be when you will have someone with 800+ credit scores.

Rick Cason– Branch Manager
Integrity Mortgage – Powered by The Mortgage Firm

(407) 617-RICK(7425) Email Rick.Cason@TMF.Mortgage
NMLS #363845 Branch NMLS #1077128
2626B Edgewater Drive Orlando (College Park), FL 32804