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Managing Credit |
Managing Credit - The four most important factors regarding credit are:
1. Pay all of your bills on time. Know what bills report to the credit bureaus and which ones dont. This will help to maintain a better credit rating. Do not let accounts go to collection.
2. Limit your balances on all revolving credit (such as home equity lines and credit cards) to approx. 20-39% of your credit limit. (If you have 2 credit cards with balances of $250 each and a limit on both of $1,000, this is ideal). Do not max. out your credit cards and it is better to have small balances on 3 cards than to have 1 large balance on 1 card.
3. 2-4 credit cards is the ideal number of open credit cards to have. Make sure that you do not close credit card accounts when you pay them off. Your length of credit history and how long you have had open accounts is a big factor in credit scoring. If you have a ton of credit cards, close the newer ones and leave the ones that have been open for a long open.
4. Credit inquiries - I know there is a myth that you should only let 1 company pull your credit when you are looking to buy something because every pull lowers your credit score. This is right and wrong. Watch how many people are pulling your credit because you dont want to have numerous credit inquiries each and every month. However, when you are shopping for a mortgage, or anything for that matter, make sure you do all of your shopping around within a 14 day time frame because all mortgage related credit inquiries within this time frame will only affect your credit as though only one company checked your credit.If you have a credit card that is maxed out you can request a credit line increase to bring your balance to limit ratio back within the preferred 50% range. This simple process can have a great affect on your credit score within a months time. However with a increased credit line you do have to exercise fiscal responsibility to avoid getting deeper into debt. If your credit score is preventing you from qualifying for the mortgage program you desire, talk to one of our representatives about the variety of credit improvement strategies which can help you improve those scores and get into the refinance or purchase loan you need. Many consumers seem to make a huge deal out inquiries, Although they are negative, they are only a negative factor for 90 days from the inquiry date.
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