What's Your Credit Score?
June 19, 2015 | Posted by: Cam Brown
Your credit score is a major factor in securing a mortgage and also determining what interest rate you will be offered and how much debt you will qualify for. Over the last 14 years, I have worked with clients with credit scores in the low 500s to mid 800s many of whom really don't understand how scores are arrived at or reported.
So here's a quick snap shot of how to keep your score strong. Credit scores are based on several attributes and this is a good guideline to follow:
Payment history
The single biggest factor in your credit score is having a timely bill payment history. Recent late payments are factored more heavily than old ones so start today and never let a bill get past due.
Where You are in your limit
Keeping your accounts near their maximum limit can signal that you don’t manage credit responsibly and that you may have trouble making payments in the future. You should strive to keep your outstanding balance in the lower 1/3 of your authorized limit.
Length of credit history
The longer you have had credit in good standing, the better. Keep your oldest cards; that good history will help you, and don’t regularly take out new credit accounts.
Pursuit of new credit
Opening several credit accounts in a short period of time is a risk factor. How many enquiries done on your behalf can also have an effect on your score.
Types of credit
A healthy mix of credit i.e. car loan, mortgage and credit card is more positive than a concentration of debt in only credit cards.
With an excellent credit score (680 and over), lenders will give you a quick mortgage approval at the best possible rates. This score says you are reliable and responsible with debt. At a lower score (below 620), I have Lenders that will work with you but not at the very best interest rates.
If you think your score is low, I can review your situation and discuss how your score will be viewed by lenders and outline your best options for credit improvement.
