|By PR Newswire||
|February 26, 2014 10:51 PM EST||
DENVER, Feb. 26, 2014 /PRNewswire/ -- There are many 'Credit Repair' companies out there, but the truth is, YOU are your own best resource.
One of the most important assets you can have is good credit. Before you begin this journey, you must understand what it takes to have good credit. Here is a formula to help you have a better understanding.
Tip #1) Pay your bills on time.
This is the most important factor of having good credit. This is 35% of your overall credit. It can take you a lot of time to build good credit, and only one month to have your score go down considerably with a 30-day late payment.
Tip #2) Keep your credit card balances to 35% of your total limit or less.
Keeping your credit cards constantly maxed out is detrimental to your score. It shows creditors that you are struggling with your minimum payments. It also demonstrates a high debt-to-income ratio. This is 30% of your overall score.
Tip #3) The best credit is old credit.
The older your credit lines, the better. With that said, do not close out any credit lines unless you absolutely have to. Although this is 15% of your overall credit score, it's also one of the first things creditors will look for. They want to see you have a long history of making payments responsibly.
Tip #4) New credit
Opening several new credit accounts in a short period of time represents greater risk - especially for people who don't have a long credit history. Your FICO Score takes into account several factors, including how you shop for credit. Open new accounts sparingly. This represents 10% of your score.
Tip #5) Have a mix of credit use
The final 10% of your credit score is based on having a mix of credit used. Being responsible with just one type of credit will get you good credit. However, to get closer to that perfect score, you should mix it up between revolving and installment loans, including a mortgage, car loan, department store cards and if you are a student, even student loans.
SOURCE RE Professionals