Your credit score is made up of 5 components.

1. 35% – Payment History
a. On-time payments
b. Length of time that has passed since the most recent negative item

2. 30% – Credit Balance to Credit Limit Ratio
a. Keep your balances below 30% of the available limit

3. 15% – Length of Credit History
a. The longer the history, the better

4. 10% – Type of Credit
a. Ideal credit profile consists of 3 – 5 revolving credit cards, a mortgage account, an auto loan, and a line of credit

5. 10% – Inquiries
a. Inquiries stay on the report for 2 years but only affect the score for 1 year
b. Auto and mortgage inquiries occurring within a 45 day period are treated as 1
c. Many inquiries don’t count: personal, promotional and job related, insurance & account reviews

Whatever you do, be sure you are making your payments on time, especially if you plan on applying for a mortgage in the near future. The recent history carries the most weight – a 60 day late from 1 year ago will not have as much negative impact on your score as a 30 day late 2 months ago. When applying for a mortgage, your credit history from the most recent 12 months will have the most weight and impact on your score.