How to maintain a high credit score
December 1st, 2008 Sharon Merritt
There are three major credit bureaus that collect data that determines your score. The major purpose of a credit score is to predict if there will be a 90 day late payment over the next 24 months. The score is a numerical value that ranks individuals according to their credit history at a given time. New data is sent on a regular basis so your score can change daily. The highest score possible is 900 and the lowest is 350. the median score is 720, while the average is 686. Here is a familiar scale (like in school) that will give you a rough idea how your score looks: A: 750+; B: 700-750; C: 650-700; D: 580-650, F: <580.
Data on your report goes back 7 years (10 years for a bankruptcy) and the score is base on 30 different factors.
Scores are calculated this way:
35% from past payment history
30% from outstanding balances carried on accounts
15% from length of credit history
10% from types of credit you have
10% from your request for credit (inquiries)
Here is a list of things you can do to maximize your credit score:
*Avoid late payments of any kind; (the most recent 2 years carry the most weight).
*If you have older collections, DO NOT PAY Them OFF until speaking with someone. Normally when they are paid off the accounts will then appear as new collection and can lower your score.
*Have the right number of accounts, at least 2 open for 6 months.
*Having 3-5 different types of accounts is the optimal numer to have opened.
*Keep the accounts open that you have had for a long time, close the newer ones.
*Maximize your credit limit on credit cards (while keeping your balance low).
*Minimize your balance on credit cards. A balance of 30% or less of the high credit limit is best.
*Limit the number of inquiries on your credit. There is a 45 day window for “Like kind” credit inquiries, so all mortgage inquiries pulled within a 45 days counts as only 1 pull.
*Review your credit report regularly. Pulling your own report does not count as an inquiry. Both www.myfico.com or www.annualcreditreport.com are good websites to use.
This information outline was provided by Nancy Grieve, Mortgage Loan Consultant. She is happy to talk with you to answer you questions. 770-798-9780; nancy.grieve@fairfieldmortgage.com
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