I want to remove my name from 2 accounts as authorized user due to divorce. Will this affect my credit score? should I contact these 2 companies and request my own account? I need my good credit to start over and do not want to have this hold me back. What is the best thing to do?
You need a mix of credit accounts to build the highest credit score. You need revolving credit card accounts, a vehicle loan, and consumer loans (such as a student loan or a signature loan). The issue you need to focus on is the length of your credit history. If the two accounts you mentioned are the oldest in your credit report, then by closing those accounts you will damage your credit score. Therefore, if possible refinance the accounts in question if they are your oldest.
As you are inquiring about how to improve your credit score, let me give you some information on how a credit score is calculated. Your credit rating is calculated based on several variables, including:
Payment history counts for approximately 35% of your score and is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area. If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.
This counts for about 30% and weighs how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred. If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score.
The score calculation also looks at these two factors independently. Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt to credit limit ratio low.
This counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments. If you have accounts with long history (5 or more years) and no missed payments, you should keep these open and paid off.
This counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.
This accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.
Here are four steps to improve your credit score:
If you would like to learn more about credit reports, credit scoring, and what it means to you, I encourage you to explore the wealth of material offered by the Bills.com credit information page.
I hope this information helps you Find, Save, and Learn.