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Like foreclosures, short sales also stay in your credit history for seven years. And that’s seen by creditors as “a little better than foreclosure,” he says.
That said, the longer a foreclosure, bankruptcy, or short sale has taken place and the more financially the consumer has recovered, the less impact it will have on their credit, Griffin says.
3. High balances and maximum cards
“A high balance, relative to the credit limit on your cards, is the second most important factor in your credit score,†says Griffin.
The portion of your credit that you use is roughly 30% of your score.
And high balances or maxed out cards are “an indication of financial hardship,” he says. “Ideally, you would pay your card in full every month and keep your usage as low as possible. What we are seeing is that the people with the highest score have a higher utilization rate. [the balance divided by the credit limit], by 10% or less. “
And that goes for both individual cards and the collective total of the consumer’s credit lines and card balances, he adds.
A basic rule of credit score was to keep the utilization rate below 30%. “But 30% is the maximum, not a goal,†Griffin warns. “It’s the cliff. If you go beyond that, the scores will drop sharply. Conversely, the more you are below 30%, the less likely you are to default, he adds.
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