As you know, your credit report is an essential and important component for any kind of financing, be it a first mortgage, a refinance, a car loan, and more. But do you know what to watch for on your credit report? Most people just look at the number… the “bottom line,” as it were. But different factors can affect your score and it’s a good idea to check them out every time you look at your report.
What to check out:
- Active accounts. You should limit the number of active credit-card accounts you use. Yes, all the offers of cash back and airline miles and whatnot are tempting, but the more cards you have, the more your score can go on. But don’t just look at what you know you have: think about what you don’t: the easiest way to see if there’s any identity fraud going on is to look for accounts that you didn’t open. If you’ve closed an account, it will reflect that on your credit report and you will be able to verify the date you closed it. If you know that you closed an account but it doesn’t show up as closed, check it out: someone else just might be using it!
- High debt-to-credit limit ratio. Credit score companies compare your balance with your available credit, and the magic number you’re looking for is 10%. If your card has a $1,000 limit, then you want to keep a balance of less than $100 on that card at all times.
- Late payments. Most people figure that a late payment or two doesn’t matter, as long as you get the payment in. This is a huge mistake. Did you know that late payments make up 35 percent of your entire FICO score? The later your payment is, the more it negatively affects your score.
- Collections. Any collections activity on your report will go against your score, so this is the first place you want to look to repair your credit. The truth is that there is little else that collections agencies can do to make you pay besides lowering your score, but that can be enough! If you see a mark on your report that is not related to you, you can dispute it and have it removed.
At Avrus Financial and Mortgage, we’ve been helping people understand and improve their credit scores so that they can obtain a mortgage for over four decades, and we can help you, too.
Why not ask us how… today?