Continued from part 1.

Here is some basic information on what you need to know about credit scores and what goes into determining your credit score.

Here is a word of caution for you to consider: If you pay off all of your collection accounts, especially those that are older, you may actually cause your credit score to drop on a short term basis. If you are trying to apply for a mortgage, then you are going to want to consult a mortgage professional to make sure that paying off these old collection accounts is going to benefit you rather than hurting you, at least in the short term.

The number of inquiries on your credit reports is also going to have an impact on your credit scores as well. Although it is not going to carry nearly as much leverage as the numerous other factors that go into determining your credit score, you are still going to want to avoid allowing your credit score or credit reports to be checked unless it is absolutely necessary to do so.

The companies that are responsible for determining your credit score cannot fully disclose all of the various inner workings that determine what goes into your credit score. They will tell you what types of credit can help or hurt you, but they really do not go into depth when it comes to exactly how. There are still some basic rules that you are going to want to keep in mind when it comes to your credit and credit scores. For example, one of these rules of thumb is that your balance should always be less than half of the highest of your available balances. Let us say that your highest available balance is $1,000. Your actual balance should then be less than $500.

Another factor to consider is a seasoning factor. Someone that has maintained their good credit standing for a long time is generally going to have a much higher credit score in comparison to somebody who has just recently established credit, for example.

How many open credit accounts that you happen to have open at the time is also going to influence your credit score. Having less than 3 accounts or more than 5 accounts can be detrimental.

If you have recently applied for bankruptcy, then you can be assured that it will remain on your credit record for no less than a period of seven years. Despite this, you can still do things that would raise you score. Just keep in mind that the process is likely going to be longer, since you have a bigger black mark on your credit report that you need to recover from.

Another thing that affects your credit is the type of credit that you have. Always stay away from finance companies. Try mixing it up with installment loans and revolving debt.

Photo Credits: Travelin' Librarian

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