The Five Factors of Credit Scoring

1. Payment History- 35% Impact

Paying debt on time has the greatest positive impact on your credit score. Late payments, judgments and charge-offs all have a negative impact. Missing a high payment will have a more severe impact than missing a low payment, and delinquencies that have occurred in the last two years carry more weight than older items.

2. Outstanding Credit Balances- 30% Impact

This factor marks the ratio between the outstanding balance and available credit. Ideally, the consumer should make an effort to keep balances as close to a zero as possible, and at least 30% below the available credit limit.

3. Credit History- 15% Impact

This portion of the credit score indicates the length of time since a particular credit line was established. A seasoned borrower will always be stronger in this area.

4. Type Of Credit- 10% Impact

A mix of auto loans, credit cards and mortgages is more positive than a concentration of debt from credit cards only.

5. Inquires- 10% Impact

This percentage of the credit score quantifies the number of inquires made on a consumer's credit within a six month period. Each hard inquiry can cost from 2 to 25 points on a credit score. Note that if you run a credit report on yourself, it will have no affect on your score.