Yesterday we began a discussion on improving your credit before going to get qualified for home financing. Today we’re going to continue looking at that topic to look at some more tips from MyFico, which knows of which it speaks.
First off, let’s look at payment history, which contributes the greatest percentage (35 percent) to a FICO score calculation. If you want to improve this category, here are the steps you can take:
· Pay bills in a timely manner.
· If you’ve missed payments, get and stay current.
· Know that you can’t remove a collection account simply by paying it off.
· If you’re struggling, contact your creditors or retain a legitimate credit counselor.
Now let’s look at amounts owed, which contribute 30 percent to a FICO score. A few tips in this category:
· Keep your credit-card and revolving-credit balances low.
· Don’t move debt around – pay it off.
· Don’t try to raise your score by closing unused credit cards.
· Likewise, don’t try to increase your available credit by opening unnecessary credit accounts.
What about the length of your credit history?
· If you haven’t been managing credit for very long, don’t open many new accounts in a short time.
· Know that these new accounts lower your average account age, which in turn has a larger effect on your scores absent much other data.
· In addition, you may look like a credit risk if you’re a new credit user opening many accounts in short order.
So how to handle new credit?
· Limit your rate shopping to a focused time period as FICO scores distinguish between searching for a single loan and a search for many credit lines.
· If you’ve had issues, re-establish a good credit history.
· Know that requesting and checking your own credit report won’t cause any dings.
Finally, a few more general tips:
· Establish new credit only as needed.
· Don’t be afraid to have credit cards – but manage them with care.
· Know that closing an account doesn’t remove it from your credit report.
Have more specific questions? Get in touch!
Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email firstname.lastname@example.org. www.ceceblase.com