Credit Reports (revisited)
It's been a while since I addressed the subject of credit and credit scores. It's good to note that there are three credit "bureaus" out there, and your credit score is based on all three. A "good" score is anything over 720 (perfect is 840). Below 720 and your rate of interest on a big purchase (like a home) may be seriously affected. Below are three ways to keep your credit scores high, in order that you don't pay exorbitant fees in order make a lender comfortable in lending you money.
This from MSN Money Manager:
Pay all bills on time. This is probably the most important factor in the FICO calculation. If you're consistently 30 days overdue, your score can drop by as much as 100 points, depending on how long the account has been open and how long ago the late payment took place. To avoid late payments, consider automating your bill-paying process.
Think twice before closing accounts. Lenders are looking for consumers with long credit histories that have been managed well. But because of the increase in identity theft, you don't want too many open accounts that you don't use. "Be judicious about the accounts you have," says Norm Magnuson, public affairs officer for the Consumer Data Industry Association. (In other words, don't close a 20 year perfect account; and don't open new accounts in order to get a discount on your next purchase.)
Minimize credit-card applications. On average, a consumer has a total of 11 credit obligations, of which seven are credit cards and four are loans. Each time you apply for credit, a lender requests to view your report. This inquiry is noted and can reduce your overall score. Don't apply for unnecessary credit. If you're in the market for a big-ticket item that requires a loan, avoid credit applications for 18 months prior to your purchase. (It's also interesting to note that an application for a home loan at a particular interesst rate doesn't affect your scores.)
Keep balances low. The FICO score evaluates your total balances in relation to your available credit. This is known as credit utilization. Credit cards that are "maxed out" can lower your score. Try to spend only 30% of your credit limit. If you have a $10,000 limit on one card, keep the balance near $3,000.
These are very "wise" pieces of advice. Keep your scores high. It makes things easier for you, for your loan broker, AND for your realtor!
This from MSN Money Manager:
Pay all bills on time. This is probably the most important factor in the FICO calculation. If you're consistently 30 days overdue, your score can drop by as much as 100 points, depending on how long the account has been open and how long ago the late payment took place. To avoid late payments, consider automating your bill-paying process.
Think twice before closing accounts. Lenders are looking for consumers with long credit histories that have been managed well. But because of the increase in identity theft, you don't want too many open accounts that you don't use. "Be judicious about the accounts you have," says Norm Magnuson, public affairs officer for the Consumer Data Industry Association. (In other words, don't close a 20 year perfect account; and don't open new accounts in order to get a discount on your next purchase.)
Minimize credit-card applications. On average, a consumer has a total of 11 credit obligations, of which seven are credit cards and four are loans. Each time you apply for credit, a lender requests to view your report. This inquiry is noted and can reduce your overall score. Don't apply for unnecessary credit. If you're in the market for a big-ticket item that requires a loan, avoid credit applications for 18 months prior to your purchase. (It's also interesting to note that an application for a home loan at a particular interesst rate doesn't affect your scores.)
Keep balances low. The FICO score evaluates your total balances in relation to your available credit. This is known as credit utilization. Credit cards that are "maxed out" can lower your score. Try to spend only 30% of your credit limit. If you have a $10,000 limit on one card, keep the balance near $3,000.
These are very "wise" pieces of advice. Keep your scores high. It makes things easier for you, for your loan broker, AND for your realtor!
posted by John and Flo Martin at 6:41 AM
0 Comments:
Post a Comment
<< Home