Manage Your Credit Scores

February 4, 2010 No comments

Manage Your Credit Score.

The days of easy credit are long gone. With the economy being in turmoil and the banking system suffering massive losses over the last couple of years it is so important that we are diligent in managing our credit and managing our credit scores. To qualify for a home mortgage, have a car financed and even get a credit card today requires a higher credit score than years past. Therefore it is so important that we make sure our FICO scores are as high as they can be.

Improve Your Credit Score.

Many people falsely believe that just by paying their bills on time they will have a good credit score. This is the furthest thing from the truth. As a matter of fact your payment history only accounts for 35% of your FICO score. There are people who are never late on their bills with a 600 score and some with an 800 score. These tips below will help you improve your credit score.

Reduce the balances on your credit cards.

Increase the limits on your credit cards.

Try not to close out an account even if you no longer use it. Length of history increases your score.

Monitor your history with an credit monitoring service.

Limit inquiries to your accounts.

Do not frivolously apply for credit. Excess credit lowers your score.

Review your credit reports annually for errors and dispute any negative items.

These seven tips can help you keep your score high and help you qualify for financing and get the best rates available.

Risk Based Pricing.

This is not a new concept but it is very prevalent in today’s market. What risk based pricing means is that lenders access the risk and price accordingly. Your credit score is a primary factor and sometimes the only factor that determines the risk to a lender. Therefore, the higher you score the lower the risk. The lower the risk the better the pricing. Conversely a low score will cause you to pay much more for the same services. Hence the importance of managing your credit and especially your score.

Your Mortgage.

As a mortgage banker for over 20 years I have never seen credit as tight. In the past if you had a stable job, made your payments on time and could afford the payments based your your income and existing debt you would qualify for a mortgage. But with the advent of the computer models and easy credit that backfired credit is tighter than ever. Worse than that people who have always been faithful to pay their bills on time are suffering. As we fight to change the system by supporting politicians whose plans will make this an equitable playing field, we must learn to ensure we get the best financing options possible. That means focusing our efforts to manage our credit and our scores based on the 7 tips above. This way you can get the best credit score and the lowest rates possible.

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