First of all, Happy Thanksgiving to all, I hope every one had a great Thanksgiving.
One of the most valuable assets we have is our credit, however, most of us don't know much about it and what we can do to improve our credit. There are many factors that play a role in how the credit bureaus determine your credit score. Most of know about that timely or late payments affect our credit we don't much about the other factors. Here is a little information on 3 major areas that have an impact on your credit.
Amount Owed: Next to your payment history the amount owed reporting on your credit has the biggest impact on your score and can be the most confusing. Having a lot of credit cards is not necessarily a bad thing, however, having a lot of credit cards that are maxed out is. Credit cards actually help your credit, but you want to try to keep your balances below 30% of the credit limit (If you have a $1,000 credit limit, keep your balance below $300). This is one reason why I don't recommend having a Capital One card and if you do have a Capital One card check your credit report frequently. Capital One is known to report your last month's balance as this month's credit limit (if you have a credit limit of $5,000 with Capital One and your balance last month was $2,000 and you paid $500, next month they will report your limit as $2,000 month with a balance of $1,500, even though your real credit limit it $5,000), which can have severe impact on your credit score. Also, try to stay away from department store cards and other high interest rate cards, they will not help improve your score. It is also important ot know when your credit card company reports to the credit bureaus. I know a lot people use their credit cards and pay off the balance every month. However, if your credit card company reports before you pay off the balance then it will appear to bureaus that your cards are maxed out or have a high balance every month. Typically, you want to have a few credit cards with small or no balances, auto loan, and mortgage (if you have one), is a good mix.
Length of Credit History: The longer your credit history is the better. That means if you have a credit card that has been opened for 20 years but you don't use it and were thinking of canceling it, DON'T. If you cancel the card and close your account your credit score will drop. This also explains, why some times a person's score when drop when they pay off a collection account that has been opened for years (I know it doesn't make sense).
New Credit: Ahhh, I hear this all the time, I don't want my credit pulled because my score is going to drop. While, credit inquiries can have a slight and very temporary impact on you score, they typically don't affect your score. However, when you obtain new credit (credit card, auto, installment loan) your score will be drop for a short time (3-6 months). This is caused because the credit bureaus are unsure of your ability to make the new payment along with your other payments. Once you have proven that you can continue to make timely payments your credit score will rebound and in most cases will be higher than it was before.
If you have any questions regarding your credit or want to know how you can improve your score up to 100 points with in 3 months please feel free to go visit us online at, http://www.myprosperityfinancial.com/ or call us at, 303.666.6550.
Prosperity Financial
Mortgage Manager
Lafayette, CO
Purchase - Refinance - Cash-Out - Home Equity - Great Rates
The best choice for a Mortgage Manager in Colorado
One of the most valuable assets we have is our credit, however, most of us don't know much about it and what we can do to improve our credit. There are many factors that play a role in how the credit bureaus determine your credit score. Most of know about that timely or late payments affect our credit we don't much about the other factors. Here is a little information on 3 major areas that have an impact on your credit.
Amount Owed: Next to your payment history the amount owed reporting on your credit has the biggest impact on your score and can be the most confusing. Having a lot of credit cards is not necessarily a bad thing, however, having a lot of credit cards that are maxed out is. Credit cards actually help your credit, but you want to try to keep your balances below 30% of the credit limit (If you have a $1,000 credit limit, keep your balance below $300). This is one reason why I don't recommend having a Capital One card and if you do have a Capital One card check your credit report frequently. Capital One is known to report your last month's balance as this month's credit limit (if you have a credit limit of $5,000 with Capital One and your balance last month was $2,000 and you paid $500, next month they will report your limit as $2,000 month with a balance of $1,500, even though your real credit limit it $5,000), which can have severe impact on your credit score. Also, try to stay away from department store cards and other high interest rate cards, they will not help improve your score. It is also important ot know when your credit card company reports to the credit bureaus. I know a lot people use their credit cards and pay off the balance every month. However, if your credit card company reports before you pay off the balance then it will appear to bureaus that your cards are maxed out or have a high balance every month. Typically, you want to have a few credit cards with small or no balances, auto loan, and mortgage (if you have one), is a good mix.
Length of Credit History: The longer your credit history is the better. That means if you have a credit card that has been opened for 20 years but you don't use it and were thinking of canceling it, DON'T. If you cancel the card and close your account your credit score will drop. This also explains, why some times a person's score when drop when they pay off a collection account that has been opened for years (I know it doesn't make sense).
New Credit: Ahhh, I hear this all the time, I don't want my credit pulled because my score is going to drop. While, credit inquiries can have a slight and very temporary impact on you score, they typically don't affect your score. However, when you obtain new credit (credit card, auto, installment loan) your score will be drop for a short time (3-6 months). This is caused because the credit bureaus are unsure of your ability to make the new payment along with your other payments. Once you have proven that you can continue to make timely payments your credit score will rebound and in most cases will be higher than it was before.
If you have any questions regarding your credit or want to know how you can improve your score up to 100 points with in 3 months please feel free to go visit us online at, http://www.myprosperityfinancial.com/ or call us at, 303.666.6550.
Prosperity Financial
Mortgage Manager
Lafayette, CO
Purchase - Refinance - Cash-Out - Home Equity - Great Rates
The best choice for a Mortgage Manager in Colorado
No comments:
Post a Comment