San Diego Home Loans: Improve Your Credit Score

San Diego Home Loans: Improve Your Credit Score

How Is Your Credit Scored

Here are some answers to what effects your credit score. Basically, there are 3 types of credit: mortgage, installment (car loans, etc), and revolving (credit cards).

Each of the 3 credit bureaus will issue a credit score which is compiled into a Tri-Merge Credit Report. It's also important for you to know that creditors may report to just 1, 2, or all 3 of the bureaus, so one bureau's score might not contain your complete credit information. Below is a look inside a credit bureaus method of scoring your credit.

• Payment history.............. 35% of score
  
• Amount owing................. 30% of score
• Length of time................ 15% of score
  
• New credit....................... 10% of score
• How credit is used............ 10% of score

1. Payment History -- check for erroneous late payment dates, for collections check to make sure the "date last reported" is the late date not the date it was reported to collections, and check to make sure all accounts are yours. If errors are corrected, your credit score will improve.

2. Amount Owing -- keep balances below 50% of the credit card limit and dont carry more than 5 revolving accounts to maintain or improve your credit, and know that debt consolidation can hurt your credit score.

3. Length of Time -- credit established for more than 12 months can help your credit score.

4. New Credit -- several inquiries into your credit over a period of 1-3 months can harm your credit score (note: several mortgage inquiries within 14 days will only show up as 1 inquiry).

5. Type of Credit -- keep a mixture of mortgage, revolving, installment to maintain your credit score, and keep a minimum of 4 accounts open.

How To Raise Your Credit Score

Here are some simple steps you can take to improve your credit score ----

1. Keep balances below 50% of the credit limit.
2. Dont open more than 5 revolving type accounts.
3. Dont pay off old judgements/liens, if you do then it reports the current date so wait until it's older than 24 months first.
4. Bring all past due accounts current.
5. Do not be late on payments, especially mortgages as this is more critical than other accounts.
6. Use your credit regularly, a mix of 4-5 accounts.

In order of importance, from good credit to bad credit: satisfactory, late payment on an installment or revolving account, a collection or judgement, a mortgage late or a bankruptcy, a short sale, and a foreclosure.