The information contained on our credit reports affect every aspect of our lives; including employment, insurance, and even interest rates (mortgage, credit cards, automobiles, etc.). There is specific information captured on our report which is used to form our credit score:

• Payment History (accounts for approximately 35%)

• Outstanding Debt (accounts for approximately 30%)

• Length of Credit History (accounts for approximately 15%)

• Types of Credit Currently in Use (accounts for approximately 10%)

• Recent Inquiries (accounts for approximately 10%)

Payment History - Your payment history includes the following types of specific Information:

• Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)

• Adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)

• Severity of delinquency. The more recent the problem, the larger the impact on your credit score.

• Amount past due on delinquent accounts or collection items

• Time since and frequency of past due items (delinquency), adverse public records, or collection items

• Number of past due items on file

• Number of accounts paid as agreed

Outstanding Debt - Your credit score is adversely affected if you owe amounts at or near your credit limit, so if possible, split the balance and transfer some of the debt to a second card. A low balance on two cards is better than a high balance on one. (Credit card companies usually charge a 'transfer' fee, but 'reward' you for switching you debt by offering a low interest rate. Sometimes the interest rate offered is for an introductory period only, so make sure you read the fine print before transferring your debts.)

• Amount owing on accounts

• Amount owing on specific types of accounts

• Lack of a specific type of balance, in some cases number of accounts with balances

• Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)

• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History - The longer you have maintained your accounts, the better it reflects on your credit report.

• Time since accounts opened

• Time since accounts opened, by specific type of account

• Time since account activity

Types of Credit in Use - Loans from finance companies generally lower your credit score. According to FICO, this is heavily relied upon when there is little other credit history upon which to base a score.

• Number (or amount) of different types of accounts (i.e. installment loans, credit cards, retail accounts, mortgage, consumer finance accounts, etc.)

Recent Inquiries on Your Report - Recent applications for several new accounts may negatively affect your score. If you inquire about special promotions it does not affect your credit report.

Now that we know what factors the credit bureaus consider when calculating your credit scores, you might be saying to yourself... yeah, yeah, I've heard all that before. Tell me something I don't already know, like how I can raise my score!

With that thought in mind, pay your bills on time. If you have recent late payments on your credit report, lenders view this as you larger credit risk. When you get your bills, don't let this sit on your kitchen table collecting dust. Keep a log of your current bills by due date and the total amount due. Having a late payment appear on your credit report today can have a larger impact on your credit score than filing bankruptcy five years ago!

Manage your credit effective, and don't say...
About the Author

Michael Goff is the Co-Founder of Gateway Credit Connection and CreditMonkey.com, helping empower consumers to take control of their personal and business finances.

Gateway Credit Connection 15770 Dallas Parkway Suite 1100 Dallas, TX 75248 888.230.7630 Visit us online at http://www.CreditMonkey.com

As you may know, I have a very deep passion for real estate and mortgages.  In fact, this website is a true labor of love for me.   As publisher, one my many duties is to review the many books, programs and courses about real estate and mortgages that are on the market today.  I’ll be honest with you.  Most of them are garbage.  (Although I do strongly recommend the programs in the “Must Have” box above).  But, let me tell you, when I came upon the following headline, I new I found a winner… “Learn How To Quickly Build At Least $40,000 Worth Of Home Equity And Pay Your Mortgage Off In 10 Years Or Less” -Without Making Biweekly Mortgage Payments-Or Changing Your Current Mortgage. Now, the reason I knew it was a winner was because of the name behind the headline.  Craig Romero.  Many consider Craig to be one of the true geniuses in our field.  I have a lot of respect for him, and I urge you to drop what you are doing right now and click the link below...