6 Factors That Impact Your Credit Score
Did you know that a credit score (FICO) increase of a mere 50 points could save $400 or more each month on a $300,000 mortgage, resulting in a savings of $144,000 over a 30 year note? Take care of your credit and your credit will take care of you.
1. Limits. Allowing the balance on revolving accounts like credit cards to go over 50% of the limit will lower your score significantly.
2. Accuracy. Make sure that your credit card companies are reporting your credit cards’ limits. Some credit card companies sometimes try to hide their best customers’ identities from other credit card companies – who troll the credit bureaus vast databases to prescreen consumers for card offers. By withholding the limit, any balance you have on the card reflects that you are over your limit. This can be extremely detrimental to your credit score and possibly drop it by as much as 60-70 points. Ouch!
3. Keep a credit line open. It does not matter what you did over two years ago. If you have had impeccable credit in the past, whatever the case may be, if falls out of your score within two years of the last reported date.
4. Order! The order of the history on your credit lines matters. Mortgage history, revolving history, then installment loans – in that order – have the biggest effect on your score.
5. Be on time. It takes two years for a late payment to drop out of your score. Try to pay your accounts on or before the due date to insure that no late payments are reported to the credit bureaus.
6. The past is history. If you have had collection problems in the past, some of the state collection agencies are prone to buy old collection items and report them as new debts. If this happens, the collection agency is in violation of the Fair Debt Reporting Act. The last active date has to be reported correctly – as they can only report a bad debt for seven years from the last active date (meaning when money was exchanged). This can be detrimental to your credit score.
Copyright FELA, Inc. 2009