Payment History, Credit Cards, Revolving Debt and how it effects your credit scores

Payment History, Credit Cards, Revolving Debt  and how it effects your credit scores

CREDIT DMS IS YOUR HELP TODAY!
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Payment History, Credit Cards, Revolving Debt and how it effects your credit scores

Q+APayment History is 35% of your scores: How delinquent is the payment? Have you been 30, 60, 90 or 120 days late? Is it still outstanding?

When your credit scores are calculated factoring Payment History, primary consideration is given to the following categories:

·    Recent history- How long ago where you delinquent? Are you still delinquent? Recent late payments can hurt your scores by 100 points.

·    Prevalence- How many obligations do you have? How long have you had them? What percentages of your accounts show late payments?

When calculating your credit scores factoring revolving debt (where your balance can fluctuate) is looked at different than loans/installment debt (where the balance can only decrease).

Revolving debt is 35% of your credit score.
Primary considerations when factoring revolving debt, given in the order of importance:

·    Do you have any active revolving debt that has had charges on it in the last 6 months?  If you have inactive revolving debt with no late payments, you may want to charge a small amount to make it active.

·    If you have balances on your revolving debt over your limit, it is negatively affecting your scores the most.

·    If you have high balances on your revolving debt and are close to your limit it is negatively affecting your scores, even if you have made your payments on time. Lenders do not want to see high balances because it looks to them that you may not have the money to pay any more than the minimum payment.

·    If you get your balance on each revolving account below 50% of its credit limit it will have the quickest substantial effect you can make on improving your credit scores.

·    The next threshold would be a balance below 30%. Ideally you want to have a revolving debt-to-credit ratio of less than 15% of your income. But the biggest impact is when you get each account below 30% of the limit.

·    Remember this is a computer calculating your scores, so $1 over the threshold will not trigger the score change. So take into consideration monthly interest charges.

·    If you have no revolving debt or bad revolving debt you may want to get a secured credit card to start establishing revolving debt or to offset the bad revolving debt.  The credit limit will have no effect on your credit scores. Example it is twice as good to have two accounts with a $200 credit limit and a good payment history as one account with a $400 credit limit and a good payment history.  Remember to keep the balance under 50% of the credit limit.

If you are preparing to purchase a home, it may be better to have cash reserves then pay down too much debt. Once you close on your home you can always use the cash reserve to pay off the debt. Contact your loan officer to consult you on this situation.

The amount of Time Credit Has Been Is Use is 15% of your scores.
The longer you have had an account, the better the score as long as the credit you have has been in good standings.

It is important to look at how long you have had an account and how long it has been on the credit report. The average age of your accounts are taken into considerations when calculating your score. Do not close credit card accounts after you pay them off if they have a good payment history. The positive credit history helps increase your credit scores. You must also use the accounts that you have. If it has been a few years since you have used an account, it may not hold much of a score. Using the accounts you have even if it is just for a small purchase will help your score.

Try to keep the amount of credit cards you keep down to a minimum. Three or four open credit cards are a good amount to have.

Unpaid credit card balances are the worst kind of debt. Pay these down first, before mortgages, installment debt or student loans.

Generally your credit, good or bad will stay on your report for 7 to 10 years. Removing negative items on your credit report has a major impact on your scores.  We hope this information will help you to keep your good credit active while we work on removing your negative credit.

CREDIT DMS IS YOUR HELP TODAY!
http://bit.ly/11HW6j1