5 Factors That Can Have Implications On Your Credit Score

If you have been looking into getting pre-approved for a mortgage from the various mortgage lenders in Seal Beach, you have likely figured out that the state of your credit score will have a huge impact on how much money you will need to pay in the long term. You may have a rough idea of what can influence your credit score but we want people to go into negotiations with as much information as they can possibly have. Provided below is a breakdown of the five key factors in calculating a credit score and exactly how much weight each of those factors plays in the grand scheme, starting with the heaviest factor and going down to the lightest.

Your Payment History

Influence on Your Credit History: 35%.
Having a record of making timely and complete payments will go a long way to ensuring that your credit score is nice and healthy. Conversely, every single instance of delayed payment, judgment, or charge-off is going to negatively contribute to your score in a manner similar to a new car that was left exposed to a hail storm. It is also worth recognizing that the value of the payment, the monetary cost per installment, plays a factor; the steeper the cost, the greater it will influence your score. Time is the last factor here-delinquent payments from the last two years take priority over incidents further back in your credit history.

Outstanding Credit Balances

Influence on Your Credit History: 30%.
This particular factor looks at the ratio of your outstanding balance to your available credit. In a perfect world, you should do your best to zero out these balances whenever you can. It is best if you can get your balance beneath 30% of your credit limit when considering a costly purchase like a home.

Your Credit History

Influence on Your Credit History: 15%.
This facet of the credit score considers the span of time since you established a given line of credit. This is where having a history of multiple purchases on credit is always a benefit.

Types of Credit

Influence on Your Credit History: 10%.
The world is full of all sorts of loans; records of repaying auto loans, credit cards, and mortgages will go farther than just dealing with credit cards.

Inquiries

Influence on Your Credit History: 10%.
This element considers the number of inquiries made over a six-month span. Every hard inquiry can ding your score by 2-25 points, though only the 10 most recent inquiries will have any influence; any further instances within those six months will be ignored. Also, filing a credit report on yourself will not have an effect on this factor.

Wrapping Things Up

You now know what goes into a credit score and where your priorities should be when it comes to improving it. You could have zero inquiries on your history but delinquencies on major payments are going to more seriously affect your overall score.