Need To Increase My Credit Score

Question:

My credit score was 628 (not very good to begin with) I went to look for a new car and 3 dealers told me that if they tried to get me financed it wouldnt affect my score very much, however a few days later my score dropped to 601 because of the hard inquiries! My first question is will these stay on my report for 7 years? and my second question has to do w/ a balance. Since I was about 15 years old my mom has had me on a credit card account w/ her. The account is and has been in good standing but the balance is over 2,000 dollars and my report says I have a high balance to limit ratio because of this. Would it be better for me to be removed from the account or just make sure that she pays it down to a lower balance because it is the longest standing account?

Answer:

Generally speaking, closing out an old account on your credit report tends to negatively impact your credit rating. It may be best to pay the balance down. When paying down the balance you want to try to reduce the balance to 25% or lower. Typically, an inquiry can remain on a credit report for a minimum of one year. It is not uncommon for an inquiry to remain on a credit report for up to two years or more. Below are some tips on the factors that impact your credit score.

There are five key factors that go into calculating your credit score, with certain items carrying more weight than others. These factors are as follows:

1. Payment history
Payment history counts for approximately 35% of a score. It is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area.

If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.

2. Total debt and total available credit
Total debt and total available credit counts for about 30%. This section looks at how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred.

If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score. The score calculation also looks at these two factors independently.

Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt-to-credit limit ratio low.

3. Length of positive credit history
Length of positive credit history counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments.

4. Mix of types of credit
Mix of types of credit counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.

5. New credit applications
The number of new credit applications you have recently completed accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.

While you cannot calculate your own credit score accurately, you can review your credit report for on the five factors named above to get an idea of whether the accounts listed on your credit report are hurting or helping your credit score. You can then take action to improve any potential problems, such as paying down your balances or paying off collection items.

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