Check Your Credit Report

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Real Estate

Know your Credit, and love it - regardless of where it stands

We all know that your credit score is a key factor in determining if you can borrow money.  Borrowing money takes many forms, from credit cards, to auto loans, to mortgages.  

Here's the the rundown on where you score comes from - 

1. Payment History - This accounts for about 35% of your score.  Pay on time, every time.  If you can't, call your servicer!  They may be willing to work with you, and anything to not get a late payment mark on your report helps. 

2. The amount owed - This accounts for about 30% of your score.  Here's where it gets tricky.  Not all debt is bad debt, but you want to be mindful.  Have a $3,000 limit on a card?  Don't put any more than $1,000 on it, and pay it off quickly.  You want to avoid going over the 33% threshold of your credit limit.  

3. Length of Credit History - This accounts for about 15%, and there is no quick fix to it.  If you have an old card, that's still active, but maybe it has a very small limit on it, you've even thought of cancelling it.  If it's your oldest card, keep it, use it, and pay it off each month.  That 'first card' helps keep your credit on the up and up, provided you pay your bills on time, and keep your balances in order.

The rest comes from New Credit, and Types of Credit.  You want a healthy mix of installment and revolving debt.  Think car note, and a couple credit cards, not all credit cards and no car note or car note and no cards.  You also want to be careful not to apply for cards or credit too frequently.  Opening more than a card or two a year can really hurt your score. 

Most importantly!  Don't fall for 'Raise you Score' scams.  You can do it.  I recommend getting a copy of all three of your credit reports, free from https://www.annualcreditreport.com/index.action.  This site is ran by the FTC.  Is everything accurate?  If not dispute it.  Settle any collections you can, pay a little more than the minimum due (if you can) and you'll see your report clear up, and your score rise. 

The best part is, even if your credit is in the best shape, you have a plan forward.  Once you have a plan, and of course make good on it, you'll find it easier than you thought.