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Credit Scores are largely determined by Credit Cards


The creation of the Consumer Financial Protection Bureau (CFPB) as a result of the Dodd-Frank Act is proving to be an invaluable source of information. According to a CFPB report 58% of the information on credit reports comes from credit card issuers. Another 13% comes from collection agencies, 7% from student loans, 7% from mortgage lenders, and the rest of the information comes from auto loans.

If you’ve ever wondered what most affects your credit scores or which accounts have the most impact on credit scores; now you have some insight. Often credit reports contain a variety of accounts and it can be confusing as to what exactly may be hindering or even helping your credit scores.

Credit cards take the lead on most consumers’ credit reports. This finding makes sense as most consumers are likely to have more credit cards than mortgage, auto or student loans and hopefully even debt collection accounts.

As credit cards are relatively easy to qualify for and rigorously marketed to consumers, they control a significant portion of consumer credit scores.

Consumers can now target how they manage credit card accounts if improving credit scores is a goal. With 58% of information on credit reports coming from credit card issuers it is imperative that all credit card accounts are managed wisely. On time payments must be made to all credit card accounts.

Just one 30-day late credit card payment can take as much as 100 points off a good credit score. If your credit is already less than perfect the impact will not be as devastating; but nevertheless, any points taken off a credit score due to late payments may have negative and lasting impact. Imagine the impact of several 30-day lates on multiple accounts would have on your credit score.

The report also found a small number of very large institutions supply a majority of trade lines. In fact, it was revealed that half the information on credit reports comes from just 10 institutions.

Armed with the knowledge of what most impacts credit scores, you can now target credit card account management in order to improve credit scores. Payment history is 35% of FICO scores. If you want to increase credit scores, it’s vital to stay current on all your payments. The more balances, minimum payments, and due dates you have to manage, the harder it may become to stay current.

Get in the habit of keeping your credit card balances low and payments on time.

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