Is Your Credit On the Edge

So you’ve gotten your credit report – can you tell if it’s good, or on the edge??

1.  Look at the payment histories. Some parts of your bill-paying history are more important than others, different pieces of your credit history are given different weights in calculating your credit score – but the payment history is 35% of that weight. Logic would say that the MOST IMPORTANT PART of your credit score is the answer to this question – “DO YOU PAY YOUR BILLS ON TIME??”

2.  Figure out how much you owe versus how much your credit limits are. If you have 3 credit cards with a possible combined high balance of $3000, and you owe $2800 – your score is not as high as it could be.  The ideal score will be given to you if your balance is less than 30% of the total high balances.  Going back to that $3000 – your total balance on the three cards should be less than $1000.

3.  Don’t close accounts. The length of credit history accounts for 15% of your favorable score.

4.  Be careful about who you allow to pull your credit. If you are shopping for a car (for instance) and you go to 3 different lots – take your report with you instead of having each lot pull you credit.  Inquires count for 10% of your score and affect your score for 12 months after it’s been pulled.

5.  The mix of credit on your report also counts for 10%. We had a lower score a few years ago because our only credit was 6 mortgages (we owned rental property).  The credit bureaus would rather see various mixes of credit on your report.

An educated and experienced mortgage lender can help you determine how to evaluate your credit and give you solid advice on how to improve your score.  If you are considering the purchase of a home – we can help!  We close loans for folks every month who have been told they can’t buy a house!  Call Steve and Eleanor Thorne, 919-649-5058