The Five Factors of Credit Scoring• Capacity Length of Credit• Length of Credit History History 15% Capacity 30% Types of• Types of Credit Credit 10% New• New Credit Credit 10%• Payment History Payment History 35%
Capacity• Revolving Credit Cards Length of Credit• Balances under 50% Capacity History 15% 30% Types of• Optimum is 30-35% Credit 10% New• Credit Score Impact Credit 10% Payment History 35%
Credit Tip #1• Keep all your credit card balances below 50% (30% is optimal) of the available credit limit.• Your credit score could lose as much as 30-60 points if your credit cards are maxed out. Even if you are paying on time. Capacity
Credit Tip #2• It is not okay to max out your credit cards even if you pay the balance in full every month.• The credit bureaus will only report the high balance and it will adversely affect your credit score. Capacity
Length of Credit History Length of• Building Credit History Credit History 15%• Closing Credit Cards Capacity 30% Types of• Credit Score Impact Credit 10% New• Authorized User Account Credit 10% Payment History 35%
Credit Tip #3• Never close an old account. Part of your credit score is based on how long you have established credit.• Therefore, if you close an older credit card (perhaps because you now have a card with a lower rate) you will decrease your FICO score
Credit Tip #4• Intermittently use all of your credit cards so they will not become inactive and cancelled by the credit card company or not reported to the credit bureaus because of inactivity
Types of Credit• Installment Length of Credit• Mortgage History 15% Capacity Types of 30% Credit• Revolving 10% New• Proper Mix of Accounts Credit 10% Payment History 35%
Credit Tip #5• If you have no open trade lines you will have a credit score of N/A.• You should have, at a minimum, 3 open trade lines at all times.
Credit Tip #6• A secured credit card can help build credit. For more information go to www.andorracreditrepair.com for a list of secured cards.
New Credit• Opening New Accounts Length of Credit• Pulling your Credit History 15% Capacity 30% Types of• Purchasing a Vehicle Credit 10% New Credit 10% Payment History 35%
Credit Tip #7• You may boost your credit score by opting out of the prescreened credit offers received in the mail.• Go to www.optoutprescreen.com and opt out for 5 years.
Credit Tip #8• If you are planning to get a loan in the next few months do not try to open any new accounts or get any new credit cards.
Payment History• 30 Day Late Payments Length of Credit• Charge Offs & Collections History 15% Capacity 30% Types of• Short Sales & Foreclosures Credit 10% New• Tax Liens & Judgments Credit 10% Payment History 35%
Credit Tip #9• Never pay 30 days late on an open account.• One 30 day late payment will drop your credit score 100 points OVERNIGHT!• This takes at least 12 months to recover from. Payment History
Credit Tip #10• DO NOT pay off collections that are over 24 months old. This will update the DLA and it will end up lowering your credit score.• DO pay off anything that has come on in the last 24 months. This will improve your credit standing. Payment History