Wednesday, April 12, 2017

A new year for you starts now!

 The five factors that credit bureaus look at when evaluating your credit history:

1)               Credit History
2)               Amount Owed
3)               Length of Credit History
4)               New Credit
5)               Types of Credit

These are the top factors that can either increase your score of decrease your score.  Make sure you have a “good mixture” of credit.  A mortgage, installment loan, and a revolving account.  Stay below fifty percent of the high credit limit.  Make on-time monthly payments.  Having two years of positive payment history will continuously increase your credit score.

Be careful of opening new credit account or closing accounts.  Anytime you open or close an account this will decrease your score anywhere from ten to twenty points off of your credit score for each bureau it’s reported too.  So imagine, you have five different credit cards, and you decide to close them all after you have paid them off in full. Not only is the account paid off in full (with no future activity), it is also a closed account.  If you close all five accounts you will see a decrease of score from fifty up to one hundred off your credit score. 

That’s a dramatic decrease.  Having a balance of fifty percent or less, and making a monthly payment will increase your score each month.  Make sure that you have some activity with your creditors in order to establish a positive payment history.  Applying for new credit is also a sensitive issue.  Each loan or credit card offer that you accept decreases your score anywhere from ten up to twenty points.  If this is a necessary step shop around first for the best deal with “one credit pull”, and get estimation of interest rates with each lender or credit card company before making a final decision.  This will help you by decreasing the number of inquiries that you accumulate while having lenders or creditors pull your credit report.

If you have a department credit card consider consolidating these balances with a nationwide creditor who will negotiate a zero percent annual percentage rate for the first twelve months. Make sure that you negotiate up front a reasonable interest rate after this deal expires. Ideal are six percent or less.  Department credit cards have the highest annual percentage rates.  Do your homework first by making sure that your credit is clean, and your score is above the average range.  

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