Brian Ripp ~ Your Bay Area & Fremont Real Estate & Financial Agent

1. Pay your bills on time. Payment history accounts for roughly 35% of your score. So paying bills on time is the most important thing you can do. If you’re behind, get caught up and then stay current. If you’re struggling, contact your creditors to work out a payment schedule.

2. Increase the length of your credit history. It accounts for 15% of your score. Canceling an old card or getting a lot of new credit within a short time span can hurt your score because it lowers the average age of your accounts.

3. Keep credit card balances low. Credit utilization makes up 30% of your credit score. Try to keep the amount you borrow below 25% of your available credit. Even if you pay off your credit cards every month, the average balance will still impact your score.

4. Minimize new credit requests. They account for 10% of your credit score. Every time a potential lender asks for a copy of your credit report, an inquiry is recorded. If you will be applying for a loan in the near future, don’t apply for any new credit cards beforehand. You can also ask the three main credit reporting agencies-Experian, Equifax, and Trans-Union, to stop unsolicited credit offers.

5. Maintain different types of installment and revolving debt. About 10% of your score depends on the type of credit used. How you handle revolving credit (like credit cards) carries more weight than how you deal with installment debt (such as car loans & mortgages).

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Whether you’re in the market for a new home, or applying for a loan, before you start looking at neighborhoods, you need to look at something else-your credit score.  Here are some of the key terms you should know:

Payment History-Your payment history is a significant factor in determining your credit score.  A history of late payments on current and past accounts is likely to have a nigative impact on your score.

Amounts Owed-What you owe counts significantly in the calculation of your credit score.  Maintaining large balances on your credit cards may be a signal to lenders that you have accrued more debt than you can handle.

Length of Credit History-A portion of your score is based on how long you’ve had established credit.  A longer credit history can help earn you a better standing with creditor grantors and lenders.

New Credit Requests-Consider ways to manage new credit wisely.  Applying for many different types of credit in a short period of time can take a toll on your score.

Credit Diversity-Mix it up.  Having a combination of account types including installment, revolving and mortgage is a good way to help diversify your credit.