In today’s economy where bankruptcy filings have increased by huge percentages, lenders are being extremely cautious before committing to mortgage loans. Credit checks are becoming much more thorough than they have been in the past. The main concern is to determine how likely you are to repay your debt on time. The answer to this question is generally found in your credit score.
A credit score gives financial institutions a good idea of your credit history. They translate this to show them how you will handle debt in the future.
Your FICO score is the most important indication of your payment history. Although each credit reporting agency provides a score, the average of the three is generally what is used to determine your credit worthiness.
There are several things you can do to improve your credit score. You should consider the following in order to have the maximum credit score you can obtain:
Be certain that all bills are paid on time. Timely bill payment translates to 35 percent of the total score.
You should limit the number of inquiries on your credit report. If you are shopping for loans, do it all at once and they will read this as one inquiry for credit rather than a continuous shopping spree.
Available credit should be used in small portions.
Contrary to what is often said, do not cancel old credit cards. Available credit and the longevity of accounts can account for 15 per cent of your FICO score.
Credit counseling can have a negative effect on your score. It is not always so, but it can possibly prevent you from receiving the best rate available.
Having a good credit score can often make the difference between obtaining a good rate or an extremely high one. It can, sometimes, result in not obtaining the loan at all. Your credit score is extremely important so you must review it frequently and ascertain that all information contained therein is accurate and up-to-date.
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