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Improve Your Credit Score

Published 4/5/2006 12:00:00 AM Views: 1147
e Finance Loans (eFinanceLoans) Refinance Loans, is a information source for credit scores, credit report, fico score, buying home, mortgage, financing credit scores, credit report, fico score, buying home, mortgage, financing

When it comes to credit reports, there are five major areas upon which you're being judged. These major areas are:

Past payment history. Roughly 35% of your credit score is made up of your payment reliability. The more recent your lateness, the more points you forgo. Your credit report will indicate whether you are 30, 60, or 90 days or more late with a payment. A history of late payments on several accounts will cause more harm than late payments on a single account. On the other hand you can greatly improve your credit score by paying your bills consistently on time.

Amounts owed. This measurement makes up 30% of your credit score. Your amount owed is calculated by adding up all of your outstanding balances and compare the number to the amount of credit that is available to you. If you are reaching -- or exceeding -- your credit limits, lenders will be more skeptical to give you a loan. At the same time, if you aren't anywhere near maxing out your accounts, you want to make sure that the credit extended to you isn't out of proportion with your income.

Length of credit history. Roughly 15% of your credit score is determined by the length of your credit history (how long you've been using credit). The greater the length of time you have been using credit, the more favorable lenders will see you. Your score also takes into consideration how long it has been since you used your accounts. Do not open a lot of new accounts at once to establish a credit history as this will actually accect the score negatively because of the low average account age.

Amount of new credit. New credit takes on about 10% of the overall credit score. Basically every time you apply for new credit, an inquiry shows up on your report. This is a big time red flag because the lender sees that you are taking on more credit. Also note that when you are shopping for a home loan, do so in a concentrated period of time. FICO distinguishes a search for a single loan and requests for many new credit lines.

Types of credit. The remaining 10% of your credit score is based on your credit use. They want to see if you use credit cards, retail accounts, or installment loans such as car and mortgages. Just remember that when talking about credit scores, more is not always better when you are talking about credit.  On the contrary, if you have no credit, lenders will consider you a higher risk than someone who has managed credit cards responsibly.


Title: Improve Your Credit Score
Tagged: credit scores, credit report, fico score, buying home, mortgage, financing
Description: Credit reports have five major areas upon which you are being judged. Past Payment History, Amounts Owed, Length of Credit History, Amount of New Credit, Credit Types
e Finance Loans (eFinanceLoans) Refinance Loans, is a information source for credit scores, credit report, fico score, buying home, mortgage, financing credit scores, credit report, fico score, buying home, mortgage, financing

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