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HOW YOUR CREDIT SCORE IS DETERMINED

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YOUR CREDIT SCORE IS BASED ON A FEW SIMPLE FACTS:

35%  OF THE SCORE IS BASED ON PAYMENT HISTORY ON CREDIT ACCOUNTS  (RECENT ACTIVITY WEIGHS MORE  THAN ACTIVITY IN THE DISTANT PAST).

30%  OF THE SCORE IS BASED ON YOUR CURRENT DEBT TO  CREDITORS.

15% OF THE SCORE IS DERIVED FROM HOW LONG YOU HAVE BEEN A CREDIT USER.

10% OF THE SCORE COMES FROM RECENT INQUIRIES AND ACTIVITY (RECENT MEANING MATTER OF MONTHS).  IF YOU HAVE BEEN ACTIVELY SEARCHING FOR, AND OBTAINING,  LOANS  (CAR LOANS,  RESIDENTIAL LEASES, CREDIT CARDS, MORTGAGE APPLICATIONS) THOSE WILL SHOW UP. 

10% OF THE SCORE IS BASED ON WHAT KIND  OF CREDIT YOU HAVE.

WHAT CAN INCREASE  (OR DECREASE!)  YOUR CREDIT SCORE?

1) PAY BILLS BY THEIR DUE DATE. (LATE PAYMENTS LOWER YOUR FICO SCORES)

2) AVOID FREQUENT, REPETITIVE APPLICATIONS FOR CREDIT. (MULTIPLE INQUIRIES FOR CREDIT CARDS AND LOANS  TEND TO LOWER YOUR SCORE).  THERE IS AN EXCEPTION:  SHOPPING FOR A CAR /APPLYING FOR A RESIDENTIAL LEASE (WITHIN A BRIEF TIMESPAN) IS NOT GOING TO ADVERSELY IMPACT YOUR CREDIT SCORE.

3) REDUCE  CREDIT CARD BALANCES. (SCORES  WILL DECLINE AS  YOU MAX OUT YOUR  CREDIT CARDS)

***MAKE IT A POINT TO OBTAIN ENOUGH CREDIT (AND ESTABLISH A SOLID CREDIT HISTORY), BECAUSE  HAVING MINIMAL CREDIT CAN (AND WILL) LOWER YOUR SCORE.

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