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5 Factors of Credit Scoring
Your FICO (credit) Score is impacted by 5 main factors. I have listed each of the factors below and their corresponding impact on your score as a percentage. You will also find a brief description of each factor.....
Payment History (35% Impact): Paying debt on time and in full has a positive impact. On the other hand; late payments, judgments, and charge-offs have a negative effect.
Outstanding Credit Balances (30% Impact): Debt ratio of outstanding balance to available credit is important. Keeping that proportion below 30% is critical to maintaining great scores.
Credit History (15% Impact): The length of time a particular credit line has been opened is important. A seasoned borrower is stronger.
Inquiries (10% Impact): Hard inquiries for credit will negatively impact the score. Auto and mortgage inquiries receive special treatment as 20 inquiries can be made in a 45-day period and still only be treated as 1 inquiry.
Type of Credit (10% Impact): A mix of auto loans, credit cards, and mortgages is positive, rather than a concentration in credit cards only.
Feel free to contact me with any questions you may have on credit scoring and how to improve your specific scores…I’m happy to help!
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