Credit Scores, Higher Scores and big Mortgage Savings

Credit Reporting:

Credit reporting is a complex process that involves a variety of factors such as timely payment of bills and length of credit history. Scores are derived from a combination of scores from all 3 major agencies. The scores reflect how one handled their credit over the past 24 months, with the aim at showing how one may manage their debt in the future.

Typically low scores, say in the 600’s, can be brought up in as little as several months. Ways to do this include: paying bills on time, watching the amount of outstanding debt, and paying at least the minimum amount due. But it is a slow process where your score might move up 30 points in one year even if you mange to do all the above mentioned without failure. Issues such as personal bankruptcy and more than one payment that exceeds the due date by 3 months or more has a negative effect. However, be patient. One can still build their credit score; it will only take a little more time.

It is estimated that one out of every four credit scores have serious errors that could significantly lower your credit scores, affecting you ability to get loan approvals, and or limit your ability for the best loan terms. You should check your reports for outdated information, paid off loans shown as still due, and monies owed by others with names similar to yours. It can take up too 6 months to have errors corrected.

So if you plan to apply for a mortgage, check your report a few months in advance in anticipation of mortgage application.

Raising your Scores:

1. Pay bills on time – payment history affects about 35% of you score.
2. Keep Credit balances at 30% of your credit limit – Around 30% of your score is based on how much credit you have access to and how much you are using.
3. Don’t cancel credit cards to up your score – About 15% of your score is based on length of holding credit cards. A card held for a few years is better for your score then one just obtained.
4. Don’t apply for too many credit cards – Around 10% of your score is determined by the amount of times lenders request your report.
5. Watch the kinds of credit used – About 10% of a score is calculated on types of credit used. For example, unsecured loans are usually considered risky on a credit report.

Getting Your Credit Reports:

Under the Fair and Accurate Credit Transaction Act, every America is entitled to a free credit report at least once annually from all 3 major credit bureaus. Go to or call 877-322-8228 for a free annual credit report. Scoring on credit reports costs though at about $6 per agency.

Experian – – 800-685-1111
Equifax – – 888-397-3742
TranUnion – – 800-888-4213

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