Fair Isaac, the creator of the fico scoring model, reports the following factors determine a fico credit score:

• 35% payment history
• 30% balances owed
• 15% length of history
• 10% new credit
• 10% types of credit used

The percentages reflect how important each of these factors are.  See any surprises there?  What about inquiries?  They do not even make the list.   Most of these factors are intuitive, but the second largest factor: 30% balances owed, takes many people by surprise.  The key is to keep you credit card balances low, below 30% of the credit limit preferably.  As credit card balances approach the limit, the fico credit score drops.  I have seen some drastic cases where a person has never had a single late payment, but their credit score is in the 500s because of many credit cards being maxed out and usually several of the accounts are new.  Fair Isaac does not distinguish between a credit card with a $10,000 limit compared to a $300 limit, the utilization factor is the same so closely watch those accounts with low credit limits.  If you are planning to apply for a loan, pay your credit cards down at least two months in advance of your application.

Visit my website:  www.dominionrates.com for links to credit education and repair resources.  Now more than ever fico scores are important.

Contact me with any questions about credit and mortgage financing: dan@dominionrates.com

Daniel D. Thierry, CRMS

Sr Mortgage Advisor and Credit Repair Specialist

PH:  610-614-1903

TF: 800-443-4414