What is a credit score? A credit score is a number assigned to a person that indicates to lenders their capacity to repay a loan. A credit score is established by a person's past credit history. It is a number between 300 and 850. The higher the number, the more creditworthy the person is deemed to be. (

Why is my credit score important? Your credit scores usually determine the price you pay for your money (your mortgages, your auto loans and leases, your credit cards, business loans, etc.) 

What factors determine or affect my credit score? 

1. Your Payment History: 35% impact on your credit score. Paying debt on time and in full has a positive impact. Late payments, judgments, charge-offs, collection accounts and bankruptcies have a negative impact. If you have any bankruptcies within the last 7 years, it will seriously affect your ability to borrow or establish new credit accounts. If you have any judgments within the last several years, it is very important that you pay off the judgement and get a "satisfaction of judgement" from the court. Any unsatisfied or recent judgments will make a bad dent in your credit scores and adversely affect your ability to borrow. Usually, judgments and liens must be paid prior to the closing. Timely mortgage payments are weighted heavily by the scoring systems and are one of the most vital requirements that lenders look for when evaluating your credit history. Many times a single late mortgage payment within the last 12 months can hold up your file or spell the difference between the best interest rate and the next credit level. Your payment history on other debts (car payments, credit cards) are also given a lot of weight. (courtesy of: CMPS Institute)

2. The balance you owe vs. Your available credit lines: 30% impact on your credit score. Keeping your credit balances below 50% of your available limit is very important. Keeping your balances below 30% of your available credit is even better. For instance, if you $10,000 and you have $100,000 of credit available to you, you are only using 10% of your available credit line. On the other hand, if you owe $10,000 and your credit limit is $10,000, you have "maxed out" your available credit and your credit scores will be negatively impacted. Therefore, it is not how much you owe, but how much you owe compared to what you are able to borrow. 

3. Your Credit History (how long your accounts have been opened): 15% impact on your score. The longer your accounts have been opened, the higher your score will be; newly opened account will bring your score down.

4. Type of Credit that you have open: 10% impact on your credit score. A good mixture of auto loans and leases, credit cards and mortgages is always best. Too many credit cards is not a good thing, and having a mortgage does increase your score. Practical steps to improve your score in this area: 1. Have 3-5 credit cards open is optimal. 2. Having a good mix of auto loans, credit cards and mortgages is better than having only credit cards. 

5. Number of Recent Inquires made by creditors: 10% of impact on your score. Inquires affect the score for one year from the time they're made. Your score isn't impacted when you heck your own report. It's only affected if a potential creditor checks your credit. These include department stores, as well as credit card, auto finance and mortgage companies. Things to remember: multiple auto and mortgage inquires are treated as only one if made within 45 days of each other. So, it's better to shop for a car or a mortgage over a two week time-frame, rather than to prolong it over a longer time-frame. Don't apply for a lot of credit or open multiple credit cards at the same time. If you're thinking of applying for a mortgage within the next 3 months, it would be good to wait until after your loan closes before you apply for any new credit card. 

8 Easy Tips to Remember

  1.  Make all your payments on time. 
  2. Past dues on any account will destroy your score. 
  3. Pay your bills before they go to a collection agency. 
  4. Check your credit report for accuracy on a regular basis. Check it here Credit Karma or think about investing in Identity Fraud Protection
  5. Don't close your credit card accounts. If you have to, close the newest ones verses the oldest ones. 
  6. Think twice before jumping on that latest 0% credit card offer or opening a new card just to get a 10% discount at a department store. 
  7. If you don't have much of a credit history, and you are planning on taking out a mortgage in the future, it may be a good idea to establish a few open credit lines with little or no balance on them. Although newly opened accounts tend to lower your score initially, they will improve your score once they've been open for a while, somewhat active and paid off with little or no balance. 

As life moves forward and time passes, we become more and more dependent on credit, by making bigger and greater purchases like buying a Home, Business and/or Investments. I hope you ladies are able to find this information useful and helpful. If you have any questions feel free to email me: Have a wonderful week!

This valuable information was brought to you by CMPS Institute.