Improve Your Credit Score In 2021

As the New Year approaches there is not a better time to think about your credit.  While you develop goals and resolutions for 2021, be sure you focus the same amount of time and effort into the health of your finances. The best way to do this is to really get to know your credit.  Here are the top four credit score factors that shape your credit score:

1. Your payment history. The largest area of influence in your credit score is whether or not you pay your debt payments on time. Missed or delinquent payments are the quickest way to a decrease in your credit score.
2. The total amounts owed. The relative amount you owe compared to the available credit limit is another at risk area in your credit score. It isn’t how much you owe overall, but how much you have borrowed compared to the limit. For example, a $10,000 line of credit with a $500 balance will damage a credit score less than $1,000 line of credit with a $500 balance.
3. The length of your credit history. The overall time length of your credit history can also influence your credit score. Having a short credit history, or history in which the majority of your accounts are newer may result in a lower credit score.
4. The type and mix of credit. Certain types of debt, such as unsecured debts, can damage your credit the most. In comparison, secured debts like mortgages and auto loans often come with less credit damage. This is because secured debts are tied to assets and at risk of repossession if payments are missed. In this way, a borrower’s potential level of financial responsibility can be judged.

If you are experiencing financial hardship or are at risk of having your debt obligations damage your credit score, contact our experienced Houston bankruptcy attorney today.