How is your credit?
Most people at one time or another try to improve their credit to be able to secure the best rate for a mortgage, car loan or to just repair their damaged credit.
Here are some helpful tips to improve your credit score;
DO pay your bills before the payment is due preferably as soon as you get the bill. For millionaire credit building, this does have an impact on your credit score. Additionally, it keeps your average daily balance low and saves you money on interest when determining interest and insurance rates.
DO keep your account balances less than 40-60% of the limit. Potential creditors like to see that you use your credit appropriately, but not excessively. The old adage “The best way to get approved for credit is to not need the money” is true.
DO pay your biggest bills first. The larger the missed payment, the more it hurts your credit score. Simiarly, if you are forced to juggle bills, choose to skip the payments for the creditors who don’t report to the credit bureaus like utility companies and pay the ones who will report to the bureaus.
DO pay your mortgage or home loan every month. Lenders frown on late payments on your old home loan when you are applying for new loans.
DO maintain a variety of types of loans. A previous mortgage or auto loan will increase your chances of getting the next mortgage or auto loan.
DON’T cancel your credit cards. Even unused cards help your credit score. It is not until you have a long credit history with a large number of accounts that lenders start to be concerned that you are possibly overextending yourself. If you have trouble not using your cards wisely, freeze them in a block of ice, even cut up the cards. But don’t cancel the account!
DON’T sign up for more cards or get too many rate requests over an extended period of time . Strategically plan and concentrate your efforts when applying for additional credit or loans.
DON’T pay old unpaid bills. This will draw attention to the old accounts. Showing recent activity can keep the information on your report for an extended period of time. Sometimes it is better to leave sleeping dogs lie.
For more information on home buying or selling, give us a call!
Pam Parton & Joanna Woolley
760-580-1615 or 760-580-1630
Brian Olenik of
Corinthian Title
contributed to this
article
Understanding your FICO score and how it affects your ability to obtain credit.
FICO scores
REMOVING SOME OF THE MYSTERY ABOUT CREDIT SCORING
Fair, Isaac Co., the major provider of credit scoring systems to lenders, revealed how it determines credit scores, also know as FICO scores. Many lenders use these scores to predict how likely a borrower is to repay a loan.
FIVE MAIN FACTORS INFLUENCE YOUR FICO SCORE:
1) PAYMENT HISTORY
Payment history accounts for about 35 percent of your score. Paying your bills on time is the best way for you to receive a high FICO score.
2) YOUR CURRENT DEBT
About 30% of your score is determined by how much you currently owe. If you owe a lot of money in relatio lto your available credit limits, you may appear over extended. The key is to keep your balances low on unsecured debt such as credit cards. Even closing unused accounts may not improve your score.
3) HOW LONG YOU’VE HAD CREDIT
The longer you’ve had credit and handled it responsibly, the better your FICO score will be. The length of your credit history accounts for 15% of your score
4) APPLICATIONS FOR NEW CREDIT
Applying for several credit accounts in a short period of time could indicated that you may soon be over extended and may lower your score. This is about 10% of your score.
5) MIX YOUR CREDIT
The final 10% of your score is determined by the kinds of credit accounts you have, such as credit cards, retail accounts, installment loans, finance company loans and mortgage loans, and how many of each.
Ther are other elements, mostly subcategories of the items listed above, that go into your score, including your occupations, time at present job, time at your current address, home ownership and much more. For more information or to obtain a copy of your FICO score, visit www.fairisaac.com
Following these guidelines will help you obtain better financing rates when you are ready to purchase your next home.
Give us a call with any real estate questions you may have, we’re here to help and we answer our phones!
Pam Parton and Joanna Woolley
760-580-1615 or 7605801630
Brian Olenik of
Corinthian Title
contributed to this article
