It’s very important to understand how your credit score works, and how you manage your credit. We have compiled the basics below.  Each category has a percentage of importance, and they all must be in balance to get your score into the “low risk” rating to get the best loan rates.  We at Smartway Advisors routinely advise our clients on how to increase their score and better manage their money.

Repayment History: Pay all your bills on time (30 days), if you have some late pays, they will go away in time.  Keep a solid schedule of bill paying.  This is 30% of your overall rating.

Availability in Revolving Accounts: Maintain at least 65% of available credit unused.  Pay off revolving debt each month, if possible, but do not close the account.  This category counts for approximately 30% of your rating.

Length of Credit: Reduce the number of new accounts.  Every new account affects the average age of your accounts.  The longer you have an account the better.  New borrowers must simply wait it out.  This category accounts for 15% of your score.

Inquiries:  This is the number of times a creditor has pulled your credit during the last 24 months, at your request.  You checking your credit does not affect this score.  This is 10% of your score.

Mix of Credit: Mix between installment and revolving credit lines.  Keep a majority in installment loans.  This category accounts for 10% of your rating.

Be sure to go online and get free credit report at www.annualcreditreport.com.