Improving Credit | Long & Foster

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Review the 5 factors of a credit score

Credit rating bureaus use statistical formulas to review the data in your profile and compare it to credit performance of consumers with similar profiles. A credit scoring system awards points for each factor. The total of your points determines your credit score. The following factors are used to determine your credit scores:

  1. Making Payments on Time

    Late payments, delinquent accounts, and bankruptcy will have a negative impact on your credit score.

  2. Credit Usage

    Many scoring models compare the amount of debt you have relative to your credit limits. If the amount you owe is close to your limit, or in other words you’re nearly maxed out, this is likely to have a negative impact.

  3. Length of Credit History

    A short history can have a negative impact, but can be offset by on-time payments and low balances.

  4. Recent Applications for More Credit

    Applying for too many accounts within a short time period can negatively affect your score.

  5. Mix of Credit Types

    Many scoring models consider the number and type of accounts you have. A mix of installment loans and credit cards may improve your score. Too many finance company accounts or too many credit cards will likely hurt your score.

Improving Credit

How an Individual's Credit Score is Determined

Your credit reports document your history of credit utilization. Your credit report contains personal information about where you live, how you pay your bills, whether you have been sued, arrested or filed for bankruptcy. This information is used to make decisions when you apply for credit, insurance, employment or a lease. There are many scoring models that draw from your credit files to predict your likelihood of paying debts on time. The credit score is separate. Generally, scores range from 300 to 850, and higher is better.

Request Your Free Credit Report

The three main consumer credit reporting bureaus, Equifax, Experian and TransUnion, are each required to provide a free copy of your credit report once every 12 months at your request. Many financial advisors suggest that you stagger your requests over those 12 months so that you can monitor for accuracy and changes.

In addition, many financial institutions and credit card companies provide complimentary credit scores. This is a helpful tool to keep an eye on your score without pulling a full report. Order your credit reports by visiting if you have not already obtained your report elsewhere. There is no need to contact each company individually because they use the same service to provide the free reports.

Review Your Credit Record For Accuracy

It is important to thoroughly review the report for any inaccuracies. The credit bureau and the company that provided the information to the bureau are both responsible for correcting errors found in your report. If you find any errors, you can dispute these and get them corrected. Consumer reporting bureaus are required to investigate your dispute and give you a written copy of the results. If your dispute results in a change to your report, the bureau must give you a free copy to review.

Implement Tips to Improve Your Credit

There is no quick fix to raise your credit score. However, there are steps you can take to improve your score over time.

  1. Watch your credit card balances — use 30% or less of your available credit.

  2. Pay your bills on time, every time.

  3. Keep good debt on your report such as a car loan that has been paid on time and as agreed.

  4. Don’t close unused cards – doing so can negatively impact your credit usage ratio.

  5. Be sure to pay parking tickets, library fines and the like. Unpaid tickets and fines may get turned over to a collection agency, which will hurt your score.


Long & Foster Tips

Don’t wait until the last minute to find out whether your credit needs improvement. It takes time to raise your score. Also, don’t automatically close accounts after you pay them off, because this can raise your ratio of credit usage and hurt your score.