Credit Tips for Home Buyers, and Home Owners, to Consider

good-credit-vs-bad-creditYour Credit Score is the most obvious factor in your ability to getting your Mortgage Application approved. The higher your score, typically the less risk you pose to lenders and the lower your mortgage interest rate. So how is your credit score determined? And how can you improve it?
Here are some Credit Tips for Home Buyers to Consider:

• Consumers can obtain free credit score models on-line all with different ranges.
These scores can differ from the FICO score models used by mortgage lenders

      ♦ The Only Website authorized by law to provide the FREE Annual Credit
Report you are entitled to under the Fair Credit Reporting Act
annualcreditreport. com. 

• Mortgage accounts add more points to the FICO score since they are the most
difficult type of credit to qualify for.

• The higher the credit score, the more it drops after a delinquency.
• Most negative info remains on your credit report for 7 years.
• Revolving credit balances can have an extreme impact on credit scores.
     ♦ Revolving credit is classified as credit cards, overdraft protection on checking
accounts, and other lines of credit

• Most experts recommend keeping your overall credit card utilization below 30%.
Lower credit utilization rates suggest to creditors that you can use credit r
responsibly without relying too heavily on it, so a low credit utilization rate may
be correlated with higher credit scores.
You can calculate your credit utilization rate by dividing your total credit card
balances by your total credit card limits. The resulting percentage is a
component used by most of the credit scoring models because it’s often
correlated with lending risk.

• Closing revolving credit cards can reduce scores dramatically since it can alter the balance-to-limit ratio.
      ♦ All of the accounts on your credit reports count, even if they are closed.
• The older the average age of credit, the better it is for FICO scores.
• Seasoned credit is credit accounts that are over 2 years old.
• Consumers with the strongest credit scores tend to have a mix of different
types of accounts.
The key is to manage all these accounts responsibly. Credit scoring models are
looking to see if you can handle all different types of financing as they assess
your creditworthiness.

• When consumers find errors on their credit report, they should speak with a credit expert before calling the creditor directly.
Consumers often rush to call creditors about errors on their credit  report
thinking it will help them. Often times, they may make a statement that
confirms their guilt or makes it more difficult to reach a successful resolution.

Resources: Northshore Advisory. www.northshoreadvisory.com

 

 

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Positive and Negative Affects on Your Credit Report in 2015.

While it is important to know what helps to build a good Credit Score, you also have to know what hurts your Credit Score.
Your Credit Score is a very important factor when it comes to your familygood-credit-vs-bad-credit finances.  Lenders use credit scores to determine the risk of lending money to a given borrower. It is important for getting approved for the best terms and interest rates on a Mortgage Loan. Insurance companies, landlords, and potential employers also look at your credit score to see how financially responsible you are.
Why not make a New Year’s resolution to improve your Credit Score in 2015?

Negative Affects on Your Credit
Payment History: There are many factors that can negatively affect your credit score; your payment history is one of them. Have you paid your bills late or missed payments? If you have, how late were you? The later you are with your payments, the worse it is for your credit score. Also, any charge offs, debt settlements, foreclosures, bankruptcies, wage attachments, suits, liens, or judgments against you are some of the worst things to have on your credit report.
 High Credit Card Balance: Using more than 80 percent of your total amount of available credit is another factor that lowers your credit score. Having a high credit card balance or maxing out your credit cards increase your credit utilization (the ratio of your credit card balances to credit limits listed on your credit report) and decreases your credit score.
  Requests for New Lines of Credit: If you have recently opened several new accounts, you could be a greater credit risk. People tend to open new lines of credit when they are experiencing cash flow problems or are planning to take on a lot of new debt.
  Closing Unused Credit Cards: The unused credit accounts are contributing to the amount of credit you have available. You will want to show that you are not using all your available credit. Pay them off, cut up the card, but don’t close the account. Once you close out those credit accounts, you will suddenly have less credit available.
  A Greater Number of Inquiries: The more times you apply for a credit card, shop for for a better deal on a car loan, even switch cell phone providers, the more inquiries will show up on your credit report, raise the question of financial responsibility and decrease your credit score.

Positive Affects on Your Credit
  Paying Bills on Time and in Full: Have you paid your bills on time for each and every account on your credit report? The longer you pay your bills on time, the more your score should increase. money management
  Using Less of Your Available Credit: Keep the balance you owe on your credit card to 25 percent or less of your available credit line. For example, you should carry a balance of no more than $2,500 if your credit limit is $10,000.
  Paying Off Debt: This is a lot easier said than done, but the more you pay your debt back, the more your credit score will increase.
  Steady Employment: People who have steady employment are viewed as being better at paying their bills on time.

Bottom Line: Your Credit Score plays an important role in your finances. As long as you are being responsible with your money, your credit score will reflect it.

Review Your Credit Report Annually
It’s smart to stay on top of your credit report, and to know what potential mortgage lenders will see. You can request a FREE Annual Credit Report from each of the 3 major credit reporting agencies – Equifax, TransUnion & Experian once a year at www.AnnualCreditReport.com

Only One Website Authorized By Law to Provide Free Annual Credit Report

Beware of Imposters!

There is Only One Website authorized by law to provide the Free Annual Credit Report you are entitled to under the Free Credit Reporting Act – annualcreditreport.com.

Other websites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated Free Annual Credit Report program.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s credit reporting companies.

FTCThe Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to the information contained in your credit report.

Q: How do I order my Free Annual Credit Report?
Do not contact the three nationwide credit reporting companies individually. The three nationwide credit reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.
To order:
1.   Visit annualcreditreport.com,
2.   Call 1-877-322-8228.
3.   Mail the Annual Credit Report Request Form to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281.

For details and FAQ’s about your rights under the FCRA, which established the Free Annual Credit Report program, go to http://www.consumer.ftc.gov/articles/0155-free-credit-reports

An applicant’s credit score is a major factor in obtaining the Right Mortgage at the Right Rate. It would seem prudent for any First Home Buyer to obtain a Free Annual Credit Report as part of their planning process.