Finance Friday - How is my credit score affected?
This weeks finance Friday's post is a short and simple break down of your actions can affect your credit score.
There are five ways your credit score is judged:
35% Payment history
30% Credit balances to credit limits
15% Length of time credit account has been established
10% Credit types
10% Credit inquires
Mortgage inquires affect credit scores for 14 days. After that the time period, credit scores will revert to previous scores, given there are no other non-mortgage inquires in that time frame.
Most influential categories which affect your credit score:
Payment History: Payment History: Have your accounts been paid on time and/or are there any late payments been reflected on your credit report? One late payment can drastically reduce your credit score and will take months to get it back up. I highly recommend using some sort of reminder for any credit cards that do not allow an automatic payment. Another suggestion is to use Mint Bill Pay as an easy way stay on top of all of your bills.
Balances to your credit: Are your credit cards maxed out? The second greatest benefit to your credit score is carrying a balance of 30% or less to the available credit line.
Example: your credit line is $5,000, to have the greatest positive influence on your credit score you would want your balance to be $1,500
Derogatory accounts: Collections, judgements, and tax liens from creditors have a significant negative affect on your credit score and present a higher risk factor to banks. There derogatory accounts must be paid to receive a full loan approval.
Tip: If you have a derogatory account listed on your credit report, you can negotiate with the creditor to settle the account for less than what is owed with a onetime payment. Be sure to receive documentation for the creditor stating that the account has been settled and the account will be closed.
If you have additional questions or would like a credit consultation please reach out to us either by phone or email and we can set up a time to talk: 443-716-1237 or TheMattNaderGroup@BayCapitalMortgage.com. Its never to early to speak with a lender!