Credit Score

Don’t max out or over charge on your credit cards accounts. As a matter of fact, DON’T charge on credit cards at all if possible. This is the fastest way to bring your scores down 50-100 points immediately. Keep your credit card balances below 30% of their available limit at ALL times during the loan process. If you decide to pay down balances, do it across the board; meaning, pay balances to bring your balance to limit ratio to the same level on each card (i.e. all to 30% of the limit or all to 40%, etc)
Pay bills on time. Stay current on existing accounts. Under the new FICO scoring model, one 30-day late can cost you anywhere from 50-100 points and points lost for late pays take several months if not years to recover. Don’t pay off collections or charge-offs during the loan process. Unless you can negotiate a delete letter, paying collections will decrease the credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, do it at closing through escrow.
Don’t consolidate your debit onto 1 or 3 credit cards. It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card and if you want to save money on credit card interest rates, wait until after closing.
Don’t close accounts! If you close a credit card account, you will lose the total amount of available credit you have, and this may impact your credit scores. Also, closing a card or installment account may impact other factors to your score such as the length of your credit history. Wait until after closing to close any credit accounts.

Don’t allow any accounts to run past due – not even one day. Most cards offer a grace period, however, what they don’t tell you is that once the due date passes, that account will show a past due amount on your credit report. Past due balances can also drop scores by 50+ points.

The Five Factors of Credit Scoring

Don’t apply for new credit of any kind. This includes those “you have been pre-approved” credit card invitations that you receive in the mail or online. Every time that you have your credit pulled by a potential creditor or lender, you lose points from our credit score immediately. New credit also brings a credit score down. Depending on the elements in your current credit report, you could lose anywhere from one to fifteen points for one hard inquiry.

Paying debt on time and in full has the greatest positive impact on your credit score. Late payments, judgments and charge-offs all have a negative impact. Delinquencies that have occurred in the last two years carry more weight than older items.
This factor marks the ratio between the outstanding balance and available credit. Ideally, the consumer should try to keep balances as close to zero as possible, and definitely below 30% of the available credit limit at least 2-3 months prior to trying to purchase a home.
This portion of the credit score indicates the length of time since a particular credit line was established. A seasoned borrower will always be stronger in this area.
A mix of auto loans, credit cards and mortgages is more positive than a concentration of debt from credit cards only. You should always have 1-2 open major credit card accounts.
This percentage of the credit score quantifies the number of inquiries made on a consumer’s credit within a twelve-month period. Each hard inquiry can cost from three to fifteen points on a credit score, depending on the amount of points someone has left in this factor. Note that if you pull your credit report yourself, it will have no effect on your score.

Both Jackie and Robin were very helpful and always available to answer questions I had. Thank you for making this process as smooth as it could be.

Nicole S.

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