Posted by Sandra Tessier on 5/30/2017

Your credit score is a 3 digit number that can have a huge impact on many things that you hope to accomplish in your life. One of the biggest reasons that you need a good credit score is for buying a home. As many people rely on credit cards to fund their expenses, they consequently end up in debt. This doesnít have a favorable impact on credit scores. Yet, itís so important to maintain good credit.  


Why The Score Is Important


A credit score is one of the most crucial factors in determining if you can qualify for a mortgage. It is an overall gauge for lenders to understand how financially responsible you are. The higher your credit score, the less risk you carry in the eyes of lenders. 


What Affects A Credit Score?


Your credit score is calculated based on information that is found on your credit report. There are five different things that affect your credit score, each with a slightly different impact:


  • Payment history
  • Debt-to-credit utilization
  • Length of credit history
  • Credit mix
  • New credit


Whatís A Good Score?


Absolutely flawless credit is 850. Donít worry if youíre not in that category. Only about 1/2 of one percent of consumers actually have a score this high. Once your score reaches 740 and above, youíre able to qualify for the best in mortgage rates. Even if your score is in the low 700ís, you still should be able to qualify for a good interest rate. For a conventional loan, many lenders look for a credit score of 620 and above. Being in the high 600s will help you to avoid the need for additional paperwork. Youíll also get a decent interest rate with this score. 


What If You Donít Have Credit History?


Ideally, you would have opened some type of a credit card by the time you reached the age of 20. This would help to establish credit. If you donít have any type of credit history, thereís still a few ways that you can qualify for a mortgage. In these cases, lenders will often use alternative sources in order to determine the reliability of a party theyíre lending to. Your car payment history doesnít show up on your credit report, but a good track record helps lenders to see that youíre dependable and a responsible credit user. 


What About Bad Credit?


From missed payments to errors on your credit report, there could always be some problems with a credit score. The good news is that bad credit can be fixed. There are even loan programs designed to help people with less than perfect credit scores. Generally FHA (Federal Housing Administration) loans and VA loans allow for low down payments and have lenient credit score requirement. 


Fixing Your Credit Score Is Fixing Your Habits


In order to repair your credit score, youíre going to need to fix the bad financial habits that got you into the situation in the first place. This means making on-time payments, spending less, and avoiding opening up any new accounts. Pay down your existing debt and try to make a fresh start form there. Also, be sure that you obtain a free copy of your credit report each year to keep on top of any errors that might be present on the report.





Posted by Sandra Tessier on 12/2/2014

You may think your credit is perfect because you pay your bills on time and never miss a payment. If you are having trouble getting a loan and don't know why, it could be that your credit habits are scaring away lenders. Here are some items that may be lurking in your credit report that are making lenders leery: Multiple Lines of Credit If you have a lot of open credit cards this can be a bad signal to lenders. Lenders see this as an indication that you might be having financial difficulty. Credit Inquiries Lenders also don't like it when you inquire about new lines of credit. Applying for credit can have a negative impact on your credit score.†Every time you allow a potential lender to pull up your credit report, your score can take a small hit. Co-Signing a Loan When you co-sign for a loan that dept becomes your debt and shows up on your credit report.†Potential lenders look at that debt as yours because you are ultimately responsible for it. †If the person you co-signed for stops paying, pays late, or misses payments, your credit report can be negatively impacted. Making Minimum Payments Lenders who view your credit report don't like to see that you are paying just the minimum payment. If you†consistently pay the minimum payment due, it could indicate financial stress or confirm that you are unable to pay off the full balance.  





Posted by Sandra Tessier on 5/14/2013

When you are looking to buy a home or refinance it is important that your credit is in tip-top shape. It is often a credit score that gets in the way of a home buyer and their dream home. Credit today means everything as far as your purchasing power. So if you want to be ready when opportunity knocks read on for some for smart ideas on how to keep your credit score going up.

1. Use your credit cards.

This may sound funny but it is important to have credit over having no credit. Paying in cash and over using credit cards isnít always a good move for your credit score. Cards that are seldom used are often shut down or closed by the credit card companies. Because 30 percent of your credit score is based on your debt-to-credit-limit ratio you will want to have a high your total available credit. Having one account closed increases that ratio of available credit to debt and thus lowers your credit score.

2. Pay off your credit cards.

It may seem to make sense to pay off the highest-interest card first and save the most money in the end. But your credit score will get a bigger boost from knocking off the lowest-balance card. Instead of spreading your monthly payments equally among credit cards, pay down the lowest-balance card first and pay minimum balances on the rest. As you pay off each card, apply the money you would have paid on it to the next-lowest-balance card.

3. Donít close cards once they are paid off.

The length of time youíve had credit determines fifteen percent of your score. By closing your oldest account, you can shorten the length of your credit history causing a big hit to your score.

4. Keep the balance low

Much of your credit score is determined by your debt-to-credit-limit ratio on individual accounts. Maxing out one card raises your debt-to-credit-limit ratio and your credit score. So be sure to keep balances as low as possible. Try to target no more than 30 percent of your credit limit.

5. Stay away from retail-card accounts.

These are a big no-no. Retail store cards often have lower limits and higher interest rates. So running up balances on low-limit store cards affects your credit score more negatively than does using one or two bank cards. So in the long run the fifteen percent you were going to save on the one purchase will probably cost you more in the end.