Your credit scores

By Jocelyn Porteria

Credit score is the basic and most important factor in getting loans especially mortgage loans. It is usually ranked as excellent, average, fair and poor. Usually, excellent score is 750-840; average is 660-749, fair 620-659 and below 659 is considered poor.
If you are planning to buy a home and you know your credit is not that good, do not lose hope. Most lenders provide credit counseling services to customers to help them develop a plan to qualify for a mortgage. A good starting point is to know what the basis is for a credit score. In this case, you have an idea of what to do and what not to do in order to build or maintain a good credit history.
Payment history 35% – payment should be always on time and at least the minimum.
Amount you owe vs. amount of available credit 30% – it is best to keep balances under 50% of the credit limit. On the other hand, too much available credit is not good as people will likely to use their available credit.
Length of credit history 15% – how long you have had a credit report and also how long have you been in a particular credit card company. Do not close your oldest credit card especially if you are consistently making payments on time. Avoid switching from card to card.
Mix of credit 10% – credit cards, car loans, mortgages show you can handle credit.
New credit applications 10% – multiple applications as someone is looking for best rates on mortgages and car loans are good moves. Multiple applications at the malls or stores for a 10 to 15 percent discount is not smart. It will pull your score down and not worth the savings.
@9PTLA = How To Improve Your Credit Scores?
First of all, find out what is your credit score. You are entitled to one free credit report every year from each of the three credit bureaus: Experian, Equifax and TransUnion. It can be requested at annualcreditreport.com. Save your credit report for seven years so you have proof when an item is added.
Once you know your credit score, review all the information for accuracy. The reality is: bad credit does not vanish for a certain period of time from two to seven years on a case to case basis. For example, late payments and collections will show up to seven years.
However, you can remove inaccurate information by hiring someone or do it yourself.
Look for the following information on the credit report that affects your credit scores:
There should be no late payments, collections or charge offs over seven years old.
All paid in full installment loans and collections settled for less than the amount should show a zero balance.
Incorrect accounts sometimes appear due to mistaken identity or identity theft. Contact the creditor immediately and compare the name and social security number.
Look at the original dates since this may affect the length of your credit history. Sometimes the credit card merge or you report it as missing or stolen.
Credit limit on the credit report should match with the credit card statements.
Home equity line of credit should be listed as second mortgage and not just line of credit.
Read what the credit bureaus say on your credit report. It has reasons codes to explain what was on your credit scores and what actions can be taken to improve it.
(Note: Jocelyn Porteria is a Realtor® licensed in VA. She earned a designation of ABR®, Accredited Buyer’s Specialist. For more info, call her at 571-432-8335 or email at ojporteria@yahoo.com)

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