The Most Important Factor That Affects Your Credit Score

Posted on August 1, 2009
Filed Under Credit Tips | Leave a Comment

Your credit history is more important than ever. The current economy has made it much more difficult to obtain financing for auto loans, mortgage loans, credit cards, etc. Even employers are now checking your credit rating when applying for new employment. This has become a more common occurrence.

Since your credit rating has become more important than ever before, it's very important that you understand what affects your credit scores in a positive and negative way. Most people don't fully understand that credit scores can change when you think you are doing a good thing for your credit history.

I want to make sure you understand what is the most important factor that determines your credit scores. It's the payment history on your creditaccounts. You have probably heard that it's important to make your payments on time, but did you know just one missed payment can severely drop your scores? It's bad enough a credit card company will charge you an outrageous late fee for not making the payment on time, let alone a major hit to your credit.

More specifically, the last 12 months of your payment history is the most important factor when it comes to your credit scores. If you had a late payment on a credit card 2 years ago and have maintained good payment history since that late payment, your scores will not be affected all that much. It's the last 12 payments that affect your scores the most.

Payment history makes up for 35% of your credit score. This is the largest percentage that makes up your score.

For additional help in what other factors make up your credit scores, go to Understanding Your Credit.

Joshua Bucio
Senior Mortgage Officer
http://www.genuinelending.com

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