Understand Your Credit Score (Video)
On this video, Walter Burch discusses the various categories of information that are contained in credit reports and how each of these sections are weighted by percentage to determine your credit score. By understanding how the information in your credit report is used to form your credit score, you can see what you can do to help improve your credit score.
As a rule of thumb, here a few key things you can do to help improve your score:
- Pay bills on time. Recent payment history counts most of all. A 7 day late in the last month can lower your score more than a 90 day late several years ago.
- Pay down your debts to improve your debt to available credit ratio. Lenders like to know that you have credit availalble to you that you are not using. This shows that you are not maxed out, stretched to the limit. Even if you are using a lot of your credit currently, it is important to try to pay down your debts
- Don't overapply for credit. Too many credit applications over a short period of time can lower your credit score. It is important to point that checking your own credit report will not lower your credit score.