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So lets break down the next biggest factor affecting your credit score. The balance of your credit cards compared to their limits makes up 30% of your score.

You have a credit card with a $1000 limit & borrow more than $500 on the card without paying it off before it reports the balance to the credit repositories. Your scores will be hit by up to 25 points or more. Keep your balance below 50% of your limit whenever you plan to apply for credit. To be safe it should be under... 50% of the limit a minimum of 30 days prior to applying for credit but 60 days is even safer.

So here is the next key to credit. What are the 5 key factors that make up your credit score? There are 2 that people usually guess 1 .Your payment history which makes up 35% of your score. While it is the biggest factor there are still 4 other keys. I will post but anyone want to take a guess?

The definition of a credit score and the basis behind the scoring is this - It is a risk assessment score to determine the likelihood of you going 90 days late on an account in the the next 24 months. This is key because when the software was written for credit scoring there had to be something that the score or rating would predict.

Hope you have all ordered your free credit reports. You do not need the credit scores for now so do not pay extra for them unless you are really curious. Watch for our next post on credit.

If you'll be in the market for a mortgage in the next year it is time to look at your credit. Go to www.annualcreditreport.com for a free report from each bureau. Then follow this blog because we will be walking through the reports in our Credit discussion group.