Credit Scoring 411
I pulled my credit score and report and paid 7 accounts off that were sent to collection. Will that up my score?
I have pulled my credit score and report and have paid 7 accounts off that were sent to collection. Will that up my score?
Credit scoring is a complicated calculation which considers many factors to produce a numerical representation of the likelihood that you will default on any new credit extended to you. The most important factors used in calculating your credit score are your payment history and your total amount of debt. Combined, these two aspects of your credit history account for 65% of your credit score, so improving either one of these factors should raise your credit score significantly. I'd just about always suggest to get out of debt fast.
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Since you are worried about your score, let me tell you a bit more about credit scores. The most important step in understanding your credit score is to know what a credit score is and how it is determined. A FICO credit score comes from the Fair Isaac Company. Three quarters of all lenders use the FICO credit score when considering requests for loans or credit which is why this is an integral part of understanding your credit score.
Given below is a rough formula used to calculate your score:
* 35% on your payment history
* 30% on the amount you currently owe lenders
* 15% on the length of your credit history
* 10% on the number of new credit accounts you've opened or applied for (fewer is better)
* 10% on the mix of credit accounts you have (mortgages, credit cards, installment loans, etc.)
The best way to improve your credit score is to pay your bills on time and manage your credit wisely. The most important item is your mortgage. Make sure you pay it on time every month in order to maintain a good credit score. Installment loans, where you borrow a set amount to buy new furniture or appliances, for example, are given more weight than credit cards.
Lastly, for more information on credit reports visit the Bills.com Credit Report Resources page.
I hope this information helps you Find. Learn. Save.