Crunching Credit Scores: Step 2

Credit scores flummox me a bit since there are so many unknown variables. For instance, length of credit history plays up to 15% of a role in determining a credit score. Well, if you’re 67, your credit history is much longer and more varied, versus 37, out of college 15 years with some early mistakes hindering that darn score. Since mishaps, or defaults, take 7 years to fall off or be removed from your credit report, mistakes you made in your 20’s or early 30’s, may still affect you into your more mature late 30’s or early 40’s.

On to step two:

• boost credit score.

Luckily, most of my mishaps have been removed or have fallen off, boosting my score a wee bit. Some other things that affect credit scores and how to navigate through them also include:

• credit to debt ratio: this needs to stay below 30% or lenders see you as someone who may default at any minute. Since I’ve paid down all my revolving credit cards, this one is already looking good. A credit cards guide would be helpful.
• types of credit: lenders like to see a variety of loans, not just revolving credit lines. Installment loans, like a car loan or student loan, count toward this. I am currently paying on a student loan and once it is in good standing (2 months to go) this should boost my score.
• length of credit history: again, the older you are with a good credit history, the better your score. I guess I just have to get old.
• payment history: pay your bills on time every month is my mantra. The more on-time payments that I make build a good history, so I just need to persevere.

This year I have tracked my score twice and each time my score has improved by about 20 points. The minimum to qualify for a home loan these days is 670. I have about 70 more points to go.

Of course, things in my past didn’t affect my score like a payday loans that I paid in full as quickly as possible. Many companies also offer payday loans , but I recommend paying them off immediately!