Credit and Debit Card Ratings

Advice To Homebuyers: Boost Your Credit Score

It seems like such a simple equation. If you want the best mortgage interest rate, be sure that your credit score is as high as possible. And for once, this deceptively easy to understand formula actually is true. You really can get better interest rates if you can boost and keep your credit score as close to the maximum of 850 and steer it clear of the low end of 300.

According to a recent story by mortgage and credit expert, Dan Green, there are some easy ways to get that all important credit score up to where it will really do a potential homebuyer some good. “Anyone can raise their credit score to “Excellent.” This is because credit scores are based on a formula and parts of the formula are well documented and described,” writes Green on the website, The Mortgage Reports.

So what does Green suggest? First of all, it’s important to understand what scores actually matter. While there are many credit reporting companies in the market, he says that only three matter when it comes to mortgages: Equifax, Experian and TransUnion. Not only are those the only three credit reporting outfits that matter, Green says that anyone considering buying a home needs to realize that only specific reports issued by these companies are used by mortgage lenders. They are:

  • The Equifax Beacon 5.0 report
  • The Experian/Fair Isaac Risk Model v2 report
  • The TransUnion Fico Risk Score 04

This is important to know because these are the reports mortgage lenders analyze when they’re considering your application for a home loan. “Your lender then takes the median of the three scores (i.e. the one in the middle), and calls it your credit score,” writes Green.

One benefit of applying for a mortgage is that a lender will supply you with a copy of your credit score for free. Green suggests you take advantage of this access to a free credit score and also pay heed to the notes that accompany them, which provide a road map to improving your score. Tips will include the obvious, like always paying your bills on time, and the less clear cut, such as keeping older credit cards open and using them from time to time.

Another bit of advice Green offers is to note how close you are to the credit limit on any of your cards. If you’re near the limit, that is a black mark against you in a lender’s eyes – the ideal is to have a balance of less than 30 percent of your credit limit. If you can’t pay down the limit, Green suggests asking the credit card issuer to up your card’s limit to get it below that 30 percent threshold. Paying close to attention to credit scoring details, insists Green, can up your score by 100 points in no time.

 

 

 

 

Author: Chris Warren

  • Advice To Homebuyers: Boost Your Credit Score

    Advice To Homebuyers: Boost Your Credit Score

    It seems like such a simple equation. If you want the best mortgage interest rate, be sure that your credit score is as high as possible. And for once, this deceptively easy to understand formula actually is true. You really can get better interest rates if you can boost and keep your credit score as close to the maximum of 850 and steer it clear of the low end of 300.

    According to a recent story by mortgage and credit expert, Dan Green, there are some easy ways to get that all important credit score up to where it will really do a potential homebuyer some good. “Anyone can raise their credit score to “Excellent.” This is because credit scores are based on a formula and parts of the formula are well documented and described,” writes Green on the website, The Mortgage Reports.

    So what does Green suggest? First of all, it’s important to understand what scores actually matter. While there are many credit reporting companies in the market, he says that only three matter when it comes to mortgages: Equifax, Experian and TransUnion. Not only are those the only three credit reporting outfits that matter, Green says that anyone considering buying a home needs to realize that only specific reports issued by these companies are used by mortgage lenders. They are:

    • The Equifax Beacon 5.0 report
    • The Experian/Fair Isaac Risk Model v2 report
    • The TransUnion Fico Risk Score 04

    This is important to know because these are the reports mortgage lenders analyze when they’re considering your application for a home loan. “Your lender then takes the median of the three scores (i.e. the one in the middle), and calls it your credit score,” writes Green.

    One benefit of applying for a mortgage is that a lender will supply you with a copy of your credit score for free. Green suggests you take advantage of this access to a free credit score and also pay heed to the notes that accompany them, which provide a road map to improving your score. Tips will include the obvious, like always paying your bills on time, and the less clear cut, such as keeping older credit cards open and using them from time to time.

    Another bit of advice Green offers is to note how close you are to the credit limit on any of your cards. If you’re near the limit, that is a black mark against you in a lender’s eyes – the ideal is to have a balance of less than 30 percent of your credit limit. If you can’t pay down the limit, Green suggests asking the credit card issuer to up your card’s limit to get it below that 30 percent threshold. Paying close to attention to credit scoring details, insists Green, can up your score by 100 points in no time.

     

     

     

     

  • Turning Student Debt Into Good Credit

    Turning Student Debt Into Good Credit

    There’s just no escaping the fact that a mountain of student debt is a big burden. And these days, kids fresh out of college are looking at a Himalayas-like amount of debt to pay off before they’ve even started their careers. According to a recent story in US News & World Report, college kids owe an average of $33,000 from the moment they grab their diplomas and stride into adulthood.

    But in that same story reporter Divya Raghavan offers up a way grads can make lemonade out of that forest of lemons. How? By responsibly paying off all of that student debt and showing lenders that you know how to handle your finances responsibly. Doing so is a way to build the kind of credit score and credit history every adult needs. “They can result in a graduate being able to qualify for his or her first apartment, first car loan and, very often, first unsecured credit card,” writes Raghavan.

    As Raghavan points out, there’s nothing particularly magical about how this all works. In simple terms, a large amount of student debt can only be paid off with diligent and persistent hard work. Which means that if a fresh graduate makes on-time payments month after month creditors are going to get the message that this young adult is someone who can be trusted with a car loan, mortgage or credit card. Lenders will know that a former student is low risk because student loan payments are reported to the three major credit bureaus, TransUnion, Experian and Equifax. The credit score and report that these agencies come up with is based on how timely and complete those repayments are.

    And their impact goes beyond just how likely you are to get a car loan. There are times when prospective employers will ask applicants for their credit report. Although employers can only review a potential hire’s credit report with the consent of a job applicant, it’s important to be aware of the possibility of a request. In fact, a study by the Society for Human Resource Management found that almost half of employers conducted a credit check on potential employers.

    There are times when even the most well-meaning and responsible graduate just can’t make those loan repayments. When that is the case, Raghavan writes that the best approach is to defer the loans. Defaulting on the debt will do lasting harm to your credit score. “As a good rule of thumb, remember that it’s OK to defer, but not to default,” she writes.

     

     

     

     

     

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