Lenders analyze your credit score to determine whether or not to approve a home mortgage, a car purchase and nearly all other types of loans.
Before lending you money, creditors want to determine how much of a risk you are—in other words, how likely you are to repay the money they loan you. Credit scores help them do that, and the higher your score, the less risk they feel you’ll be.
Most increases to your credit scores take place over time and require an ongoing effort from you. The only true credit score quick-fixes are to pay down debt and to successfully dispute negative information on a credit report.
Credit scoring services look at five areas of your credit (importance in %)
- Your Payment History (35%)
- Utilization Ratio (30%)
- Length of Your Credit History (15%)
- Types of Credit Used (10%)
- Inquiries (10%)
As you can see, the area of your credit with the highest importance is your payment history which accounts for 35% of your overall score. To improve this area: never miss a payment, even if you can only afford to pay the minimum payment amount.
You can improve your credit scores by taking a close look at your credit reports and charting a plan of action to improve them, if you would like assistance or suggestions on how to do this, give us a call, our experienced team will formulate a personal plan.
You should check your credit score at least once a year and do it for free at Equifax.