FICO CREDIT SCORE MYTHS AND TIPS

Purpose of the score:

The purpose of a credit score is to define the likelihood of a 90 day delinquency in the near future.

35% of the score is payment history:

Key items in this are frequency of lates, the severity of the late payments and how recent.

30% of the score is credit utilization:

this means what your current balance on your credit is in relation to maximum available credit with revolving credit being the most significant.

15% of the score is type of credit:

Important in this category is the number of years of credit. The longer – the better. One tradeline that has a six year history on it scores better that one for six years and two more for six months. The new tradelines bring the score down.

10% of the score is inquiries:

do not seek credit or have your credit run frequently. Too many inquiries within a 30 day period may affect the score adversely.

Tips:

Remove erroneous data at the bureau.

Beware of no interest for one year for purchase opportunities. These will show as a maxed out account for the whole one year period adversely affection your score.

Don’t pay collections until the close of escrow or many months before preparing to purchase a new home or refinance.

Do not close your credit cards – leave open with a small balance for a better score.

We can never guarantee this advice will influence a score immediately but over time if the above is done correctly the score will improve.