Give Your Scores a Boost

For those who have some dings in their credit report and even for those with good credit who wants to make it an excellent credit profile, there are some definite, proven steps you can do on your own. Credit scores are an important tool lenders use when evaluating a request for a mortgage in Alpharetta, GA. This process works for anyone, any credit profile.

Credit scores are calculated using five different factors, Payment History, Available Credit, Length of Credit History, Types of Credit Used and Credit Inquiries and each contributes its own percentage to the total, three digit credit score.

Payment History is the most important of the five, contributing 35% to the final score. Payment history looks for any payments made more than 30 days past the due date. If there are none, credit scores will gradually rise over time. If however such a payment is in fact logged, credit scores will fall. If a payment is listed as more than 60 or 90 days past due, scores will fall further still.

Available Credit compares outstanding credit balances with credit limits. Credit scores improve when account balances are approximately one-third of credit limits. If for example someone has a credit card with a $10,000 limit, then the ideal balance would be somewhere around $3,333. This category makes up 30% of the total score.

Length of credit history gives more weight to someone who has used credit for a longer period of time compared to someone who has just started using credit. There's really not much anyone can do to improve this part of the score other than the passage of time. This makes up 15% of the score.

Types of credit and credit inquiries each contribute 10% to the total score. Types of credit means having a mix of credit types from an automobile loan to a credit card to a mortgage to student loans. Having and using three or so different accounts helps scores. Credit inquiries logs when a consumer requests and opens a new credit account. A new account or two won't hit scores but multiple requests in a relatively short period of time can.

So, how can someone improve scores on their own? You'll notice that the first two categories, payment history and available credit both account for nearly two-thirds of the total score. To boost scores relatively quickly, make sure there are no payments made more than 30 days past the due date and get the credit balances around one-third of the credit limits. Whether you want to raise your score from 600 to 660 or from 700 to 750, the process works the very same.