So, what's really impacting my credit score? (read all the way to the end today, there is a great announcement at the bottom)

I continue to be amazed by the amount of misinformation that is still circulating about what factors make up the strongest credit scores. Factors that were important to creditors 30 years ago may not be the exact same factors that influence credit scores today. Let's take a look at a few of the criteria that are important to build the strongest credit score in today's environment.

Good - Unused, but available and open and active, revolving credit. The old way of thinking said that open, available revolving credit was a bad thing, but the contrary is actually true today. Old thinking believed that if you had large amounts of credit available to use you were at high risk of running up so much debt that you fall in to bankruptcy. Today, the thinking says that you demonstrate responsibility by having credit available to you and you use it responsibly. Thus, we often advise clients to keep a reasonable amount of revolving credit available to them but use just a small amount of it. In fact, on any given day, you will hear me recommending that someone put a small amount of a purchase on to their credit card (only a purchase that they have the cash for, and only something that they actually needed) such as a tank of gas or a pair of socks. Keep a low ratio of balance due proportionate to limit allowed; that is, have a lot of credit available to you, but use very little of it. Use it, but use very little.

Bad - Late payments. I know, sounds simple, right? But even a 30 day late payment can weigh heavily on your credit score. Occasionally I will hear a client tell me that they did not send in their minimum payment on something because they couldn't pay as much as they wanted to. A recent example is a client who had two payments remaining on a student loan. This trade line had a perfect payment history till the very end of this loan. She got down to the last two payments and decided to send them in at the same time - only she sent the two payments when the second one was due, making the first payment late. This loan had a perfect history, till the second to last payment. Darn - perfect history now gone.

Another one that I sometimes see is a client who has a dispute with a creditor and refuses to pay them. "It's the principal of the issue" is the reason I hear. Sadly, while they are arguing with the creditor, it is their own credit that is taking a beating because the payment due is not being paid.

Good - Old tax liens can now be deleted from a credit profile, not simply update to show that they are paid. You can read more here.

FAQ - there are many other questions that often come up when we are having conversations with clients and others when in comes to credit scores. Since FICO and other models are dynamic and constantly changing, get the most current information by speaking with us (we are trained professionals!) or you can find more info here.

And we are thrilled to announce that we have a new service that we've added to our website! By going in to my website using the link below, you can now access your own credit report with credit scores. Start on my homepage by clicking the button for Credit Analysis and you can simply fill in the fields from there, using your credit card for the payment. At the end, you will receive a report that gives you guidance on steps you can take to increase your score. Certainly we'd be delighted to review it with you personally, coaching you through the actions we recommend to give you the strongest score possible.