As most people know, your credit score is used by potential lenders to determine the likelihood that you’ll pay back the loan.  The higher your credit score the better as it will allow you to gain access to certain credit card reward programs and lower interest rates on debt such as a mortgage, auto loan or student loan. 

The primary drivers of your credit score are:

History (35%)

Utilization (30%)

Length of credit history (15%)

New Credit (10%)

Credit Mix (10%)

Besides paying your bills on time (history), an easy way to boost your credit score is to pay off your credit card balance before your statement close date.  Since credit utilization, the amount of credit used divided the total available credit, makes up 30% of your credit score, this can have a tremendous impact on your score. 

Personally, I pay my credit cards weekly. This way my cash accounts reflect what’s actually been spent and holds me accountable for budget purposes.

A concern I hear often is getting a hard credit pull.  Remember, that new credit lines are only 10% of your overall credit score and the ding from a hard credit pull is temporary.  Further, if you rate shop on a mortgage or student loan and have multiple hard inquiries, it will usually be counted as only one inquiry.

If you would like additional guidance, we would be happy to help. Sign up for our complimentary loan analysis.

WM

Weston is a Certified Public Accountant, Certified Financial Planner^TM, and holds the Chartered Financial Analyst designation. Weston earned his master’s degree in accountancy from the University of Missouri – Columbia. Weston is active in the St. Louis community and board member of the Anti-Defamation League.

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