Most people are unaware of the fact that there are steps you can take to raise your credit scores. It all starts with understanding what goes into account when calculating your credit scores. In this article I will share with you the factors that go into calculating your credit score so that you can know exactly how to raise it or avoid an even lower score to get approved for new home and auto credit.
Most Recent Late Payments Items- Recent account late payments on your credit report have the most damaging effect on your credit score. Negatives such as credit card late payments, personal loans, student loans, car payments and mortgage payments are all included when it comes to lowering your score. It is possible to have your credit score lowered by as much as 100 point especially when it comes to mortgage late payments.
Collection & Charge off accounts- Accounts that have been written off by creditors are known as charge-off accounts and they will also do damage to your credit scores. The more recent the charge off or collection, the more damage it will do to your credit score. You want to avoid these at all cost as they will also bring down your credit scores.
Debt Ratio- Another thing that can lower your credit score that most people are not aware of would be carrying high credit limits. So for example, if you have a total credit limit of $ 3000 and your have used $ 2700, this tells the credit scoring system that you are near your maximum limit and your score is penalized as a result.
These are some of the common factors that could be lowering your credit score. It is advisable to take a good look at your credit report to make sure that you actually own all the accounts on your report. A good amount of credit reports are known to have errors so it would be a good idea to make sure yours is not one of them.