Understanding Credit Scores

Credit scores, what goes in the credit scores, what makes up your credit score. Well there's a number of things. One is your payment history. Payment history can make up 35% of your credit score so make sure you make your payments on time. If you miss a payment that's a major impact on your credit so always make your payments on time even if it's the minimum. The next is credit utilization. How you're using your credit. If you're over extended, if you have high balances on everything, that's what they're looking at is how you're using your credit. If you're maxed out then that's going to have a 30% impact on your score. The next is your length of time. Time is your friend, the longer you have had credit the better. It likes that so15% of your score is going into that calculation and if you get new credit that's going to come in around 10%. They look at you know what you're getting as far as new credit that affects your score by around 10 percent and then it looks at the mix of credit you have such as revolving debt mortgage debt installment debt student loan debt so it's looking at those kind of things to figure out how your scores should be calculated and that's another 10% factor. So that's the factors that go into calculating your credit score. Monitoring your credit is a really good idea and there's a lot of tools out there for you. Usually just use the free tools you don't necessarily need to have all the paid tools just the big thing you're looking at is making sure nothing negative is popping in on your credit that you don't know about. sometimes medical collections can pop upon there that you may never never have gotten that bill and all of a sudden there's a 35 collection account after you so these are things you want to watch for and just monitor it an annual credit report. Go to annualcreditreport.com you can you can get your free one every year and take a look at that. It won't give you a score but if you want your score you can use www.myfico.com. That's a good one, it gives a pretty accurate score. A lot of the credit companies out there that give you a score don't really give you an actual FICO score that we're really using. They're going to give you more of a vantage score so it's kind of an average. So for example if you go to credit karma and it shows you have a 756 when you talk to your lender your score might be a 700 because it's factoring in a couple of things that average score is looking at different factors because car loans look at your credit differently, insurance looks at your credit differently, looking at when they pull your credit for employment it looks at it differently, and mortgage looks at it differently. All those things are going to are a little different as well. That gets people confused sometimes too so when you see that score it may not necessarily be your real score that we're going to look at on the mortgage side the closest I found is the fico.com website so you can check that one out. I hope this helps, talk to you later.