What Affects My Credit Score?

There are many things you can do to either help or hurt your credit score. Your credit report is based upon information that is reported to the three main credit bureaus, Transunion, Equifax, and Experian, by credit companies whom you have an account with. The credit bureaus also obtain information about accounts you have in collections, and judgements you have against you.

Your payment history is a major factor in the way your credit score is determined. If you have any 30, 60 or 90 lates on your credit report then your score will be impacted negatively.

How you utilize the available credit that you have will affect your credit score. Don't max out your credit cards and don't close credit card accounts after they are paid off. Always try to keep your credit card balances, or revolving credit, at 20-40 percent of the credit limits. The longer these accounts are opent the better it will be for your credit scores too. The credit bureaus want to see an established length of credit history, not that you get a credit card pay it off, close it and then get another one and go through the same process again. Keep that first card and provide a long established credit history with an account that is much older and still open and available to use. Also, by leaving these accounts open it will give you more revolving credit available and help with your credit score too.

Public Records can have a negative impact on your credit scores. If you have any judgements, tax liens, bankruptcies, etc. these will all show up as public records on your credit report. If these records do not show as satisfied, or they are more recent they can have a greater negative impact.

How long ago were the negative items reported also has an effect on the credit score. The more recent a negative item is recorded, the higher an impact it has on the score.

The longer the average age of your open credit accounts, the better. An average age of 7 years will give you a better score than an average age of 1 year.
Keep older credit cards open, even after you pay them off.
If you are considering opening a new low rate account and transfering your balance from a higher interest rate account, first contact the company that has your existing account. Tell them of your intentions and ask if they will match the rate of the potential new account. They may not, but you have nothing to lose by asking.

Every time someone pulls your credit it has an effect on your credit. Some inquiries affect your credit more than other. Keep the amount of inquiries on your credit to as few as possible.

There a specific ratios of credit limit to balance that affect your score.. Typically being at 25% of your credit limit is considered "ideal."

» DISCLAIMER: The information contained in this article on 'What Affects My Credit Score?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.