~Credit and Credit Cards~

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Installment loans

I have seen this on even my credit report which effects the overall score:

Lack of recent installment loan information

Current credit activity is necessary for accurately assessing a Consumer's future credit risk. Consumers who have not used this type of credit recently have limited information available that demonstrates their ability to manage credit.


>Note: Student loans does count as an Installment Loan. FICO takes into account how many months you are paying as agreed and on time.


The following list of all possible reason codes show how many aspects of your credit report are used in a FICO score. Your reason codes would be taken from this list:

 
     Amount owed on accounts is too high 
     Delinquency on accounts 
     Too few bank revolving accounts 
     Too many bank or national revolving accounts 
     Too many accounts with balances 
     Consumer finance accounts 
     Account payment history is too new to rate 
     Too many inquiries in last 12 months 
     Too many accounts opened in last 12 months 
     Proportion of balances to credit limits is too high 
     Amount owed on revolving accounts is too high 
     Length of revolving credit history is too short 
     Time since delinquent is too recent or unknown 
     Length of credit history is too short 
     Lack of recent bank revolving account information 
     No recent non-mortgage balance information 
     Number of accounts with delinquency 
     Too few accounts currently paid as agreed 
     Time since derogatory public record or collection 
     Amount past due on accounts 
     Serious delinquency, derogatory public record or collection 
     Too many bank or national revolving accounts with balances 
     No recent revolving balances 
     Proportion of loan balances to loan amounts is too high 
     Lack of recent installment loan information 
     Date of last inquiry too recent 
     Time since last account opening is too short 
     Number of revolving accounts 
     Number of bank revolving or revolving accounts 
     Number of established accounts 
     No recent bankcard balances 
     Too few accounts with recent payment information. 
 

What Is a Good Credit Score?

What actual number is a good score depends on the scoring model, the type of loan and the lender’s acceptable risk level and credit policies. For most models, the higher the score, the better. If the score on a borrower’s credit report is too low for one product, it may be acceptable for other products . Likewise, if one lender turns down a request for credit, it does not mean that another one will. For instance, an automobile dealer may accept a lower score than a creditor who offers an unsecured line of credit.

FICO scores range from 300 to 850 points. With mortgage lenders, there is a pattern for acceptable FICO scores. Generally a score of 700 to 850 is considered excellent, and very basic underwriting or information beyond the score will be necessary to get a loan with the most favorable terms. If a borrower gets this score, he or she can get a loan for a mortgage in significantly less time.

A score above 500 is still acceptable, but will probably cause lenders to look more closely at the borrower’s file to determine potential risks. Lenders may require supplemental credit documentation and letters of explanation before an underwriting decision is made. If a borrower has a score between these numbers, a mortgage decision will take approximately the same amount of processing time as it took before mortgage companies starting using FICO scoring.

A credit score can be a significant factor in the loan process or just one piece of the puzzle, depending on the lender and the type of loan. For instance, a credit score may play a larger role for consumers seeking home equity loans, as the credit score dictates the pricing for the loan. On the other hand, a traditional first mortgage may not put as much emphasis on the credit score.
What Your Credit Score Tells Lenders

FICO Score: 700 and up
A score of 700 and above is generally considered excellent. Most lenders give you an A rating. You will have access to the best interest rates because you have probably not been late with any of your loan payments. 38.6 percent of the U.S population has a score of 700 or above. Average delinquency rate = 8 percent.
FICO Score: 600 to 699
A score in the range of 600 to 699 typically means you have good credit. Most lenders would say you have a B rating, which means that you may have been a few days late with a payment or have a slim credit history. You may still have access to good interest rates, but might not qualify for the very lowest rates. 13.9 percent of the U.S. population has a score between 600 and 699. Average delinquency rate = 20 percent.
FICO Score: 500 to 599
A score in the range of 500 to 599 tells creditors that you may have paid unsecured debts more than 60 days late or been late with your mortgage payments. One or more of your accounts may be in collections. Most lenders would give you a C rating, which means you will probably have to pay at least two percentage points or more than people with excellent credit. 17.5 percent of the U.S. population has a score between 500 and 599. Average delinquency rate = 60 percent.
FICO Score: 499 & below
A score of 499 and below tells creditors that you may have liens against your property, a lender may have sued you for missed payments and/or your property has been foreclosed. You may still be eligible for a loan, but your interest rate could be three points or more higher than people with excellent credit. 18.5 percent of the U.S. population has a score of 499 or below. Average delinquency rate = 87 percent.
How Can I Improve My Credit Score?

Your credit score is constantly changing as your credit report information is always changing. Every time you try to get a loan or mortgage, the lender computes a new credit score. Taking steps to improve your credit report may not significantly or immediately impact your credit score since the scoring models study patterns of credit behavior over time.

Here are some general tips on how to improve your credit history which, over time, will improve your FICO score. Keep in mind that as negative information ages, it has less importance. It usually takes one full year of good credit behavior to see a significant change in your credit score. This means you should exhibit a full year of responsible payment behavior in your credit report — specifically, conservative use of credit, paying on time and not requesting too much credit during a short period of time.

Correct Errors:
You should get a copy of your credit report and make sure all information in it is complete
and correct. Keep in mind that any corrections you make to your report takes 30 days to take effect. Again, remember that removing or changing one incorrect derogatory item from your credit report will not guarantee an increase in the score. In addition, many lenders will not count errors on your report if you document those errors for the lender. Consumers can obtain a consolidated credit report from the GetOutofDebt.org Web site.

Inquiries:
Keep inquiries to a minimum. Don’t “credit surf,” or move balances from card to card to take advantage of promotional low interest rates. Many inquiries make it appear that you are shopping for credit, which indicates that you anticipate the need for many lines of credit. The more seasoned and longer your credit history, the better.

Close Unneeded Accounts:
The less available credit you have, the less risk you will pose to a potential creditor or lender. Keep around two to four credit cards for the best score. Close all unused or unnecessary accounts. However, keep your oldest accounts open to show the length of your credit history.

Just cutting up your card and tossing it in the trash does not close your credit card account. The safest way to close a credit card account is by sending a certified letter, return receipt requested, to the customer service department of the card issuer. Ask the card issuer to close your account and to report your account to credit reporting agencies as “closed by consumer.” In approximately 10 days, the card issuer should send you a letter confirming that your account is “closed by the consumer.” If you don’t receive the confirmation letter, follow up by calling the card issuer to make sure it closed your card and is reporting it properly to the credit reporting agencies. You may even want to get another copy of your credit report to make sure it is reported correctly.

Pay Off Credit Cards:
This shows that you use credit wisely and aren’t spreading yourself thin. Keep your credit limits and outstanding balances down. Conservative use of credit is important — keep balances at below 50 percent of the available credit for credit cards.

Pay Credit Obligations on Time:
The longer history you have of responsibly using credit and paying on time, the better your
score.

Satisfy Any Public Records, Such as Tax Liens or Judgments.
If you receive a bad score, request a copy of the four reason codes and do what you can to address them all.

https://getoutofdebt.org/19366/credit-scoring-how-it-works-and-how-you-can-improve-your-score