Taking Good Care of Your Credit Score

March 17, 2010

Susan Reber of Mission Hills Mortgage Bankers provided this great list of suggestions and I thought I would pass it along.  Susan can be reached at sreber@mhmb.com.

Most home buyers know little about the whole credit scoring process. Borrowers often find themselves at a loss when trying to find ways to upgrade their credit history. While credit repair is necessary for some, it’s not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:

 Evenly distribute your credit card debt to change the ratio of debt to available credit. Let’s say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer to that ideal bracket. 

  • Keep your existing zero balance accounts open and active; not doing this means you lose the benefits of a long-term credit history and increase your ratio of debt-to-available credit. The bottom line is don’t close those old accounts! 
  • Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you’re only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame. 

 Remember, credit scores don’t change overnight; get the ball rolling at least three months prior to applying for home financing. 

Thanks Susan!