Monday, February 1, 2021

2 Factors Make Biggest Impact on Credit

A business administration graduate of The Wharton School of the University of Pennsylvania, Abdul B. Seedat is a finance director at Steven Ford in Jersey City, New Jersey. Previously a director of finance at Vince Auto Group in Madison, Abdul B. Seedat completed applications, pulled out buyer credit scores, and handled credit approvals. He offers guidance to customers on improving their credit scores.

There are five major factors lenders use to calculate a person’s credit score. They include payment history, credit utilization, credit history, credit mix, and new credit. The first two, however, make the biggest impact on your credit score, accounting for 35 percent and 30 percent of your score, respectively.

Payment history is how often you pay back your loans. Timely payments are ideal. A single missed payment can hurt your credit score. As a consumer, make all your debt payments on time. This includes payments on your auto loans, credit cards, student loans, personal loans, and home mortgages. If you do miss a payment, you can still pay any time before the end of a full billing cycle and it will not impact your score negatively. Payments that are not loan-related like utility payments are not included in assessing payment history.

Credit utilization is the other important factor to keep track of. It is calculated by adding up the total revolving credit you are using versus your total revolving credit limits. It is a measure of how much of your qualifying credit you have taken advantage of. A credit utilization rate below 30 percent is ideal, but generally, the lower it is the better.

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An accomplished automotive sales and management executive, Abdul B. Seedat draws upon three decades of experience working at several car de...