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Having a good credit score can make the difference in your ability to finance your dreams. PerfectCreditAgain.com partners with MyMortgage4Less.com to seamlessly assist you in building your credit to the desired scores and allowing you to make higher value purchases with lower interest rates.
Scores are based on five main types of credit information. Past payment performance, such as late payment, collections, judgments and bankruptcies, past due amount, and tax liens, account for approximately 35 percent of the weight of the score. Credit utilization or the amount of outstanding debt, weighs in at approximately 30 percent of a consumer’s score. The length of a consumer’s credit history (how long accounts have been open) accounts for approximately 15% of the score. Inquiries or applications for new credit equal approximately 10 percent of the score. The type of credit (revolving versus finance company accounts etc.) used equals 10 percent. With all these seemingly rigid rules how do you “manage” your credit score?
Aside from paying your bills on time, managing your debt correctly is key. The balances on outstanding revolving debt should not exceed 30 percent of the consumer’s available credit limit on a particular credit card. High outstanding balances can have a major negative impact on the score, as they represent higher risk than accounts with lower credit utilization. By paying down, but not closing the account the consumer will improve the percentage of current balances to the potential high credit balance. Paying off revolving debt before installment debt will have a more significant impact on raising the borrower’s score. Please note, however, arbitrarily consolidating credit balances and closing accounts often will have a negative impact on the score as it skews the picture of a consumer’s credit utilization. For instance, your consumer has five credit cards each having a $5,000 high credit limit and four of those cards each have a $1,000 outstanding balance owing. You are using approximately 16% of available credit. Now, you consolidate all of the cards to just one card and close the other cards. Credit surfing for a card with a lower APR? Sounds like a good idea until you do the math and the score goes down. Why would the score go down? You have just done something that artificially skews the percentage of credit utilization from 16 to 80 percent, which obviously represents a higher risk than a consumer using less than 30 percent of available credit.
If your credit isn’t where you want it to be, don’t worry. PerfectCreditAgain.com and MyMortgage4Less.com are here to help. Contact our credit professionals today to start building the credit you deserve. 866-PCA-9651 or Apply Now.