As a credit repair analyst I hear "Repair My Credit Report" every single day. In order to help people repair their reports I work to remove negative listings, improve positive listings, but most importantly I teach you how to keep your credit scores high. Once your scores are restored it is imperative that you understand the scoring factors in order to keep your scores as high as possible. The 5 factors of credit scoring are Payment History; Outstanding Balances; Length of History; Type of Credit; and Inquires.
Your payment history makes up approximately 35% of your overall scores. By paying your debt on time and in full this creates a positive impact on your credit score. On the flip side late payments, judgments, and charge-offs have a negative impact on your score.
Your outstanding balances make up approximately 30% of your overall score. You never want to max out credit lines or your scores as this has a very negative effect on your score. Although, you might think it would be best to have a zero balance on your cards and lines of credit. Your credit score will be optimally reached by keeping an approximately 30% balance on lines of credit and credit cards. This shows the credit bureaus you can handle your credit wisely. Also, it is never a good idea to close a credit account.
The length of credit history has a 15% impact on your overall FICO score. A seasoned borrower with longer histories is considered stronger than a person with many new credit lines.
The type of credit on your report has approximately a 10% impact on your scores. A mix of auto loans, mortgages, and credit cards is positive. However, a concentration of credit cards is a negative.
Inquiries have a 10% impact on your overall scores. Hard inquiries lower your score between 2-50 points. However, auto loans and home mortgages are given special treatment and up to 20 inquiries made in a 14 day-period will only count as 1 inquiry on your score.