April 19, 2017
Credit scores are three digit numbers ranging from 300 to
850 and is calculated using an algorithm using five separate factors. Credit
scores rise and fall based upon a consumer’s recent credit history and are
directly impacted by consumer behavior. To improve credit scores, there are
some things borrowers can do to get their scores back where they need to be.
The single biggest factor when calculating credit scores is
payment history. It’s important to pay credit accounts on the due date but
sometimes that’s not always possible. If you pay more than 15 days past the due
date it’s likely you’ll incur late fees and higher interest charges but as
payments relate to credit scores, negative marks are made when your payment is
more than 30 days past the due date. Scores will fall further still when
payments are made more than 60 and 90 days past. Making timely payments will
repair scores faster than anything else you can do.
Scores react better when there are balances being paid on
time. Your scores will rise when your balances are around one-third of your
available credit lines. If your balances are greater than 50% of available
credit or even worse exceed available credit your scores will fall. If you have
high balances, concentrate on the account with the highest interest rate and
make regular payments to get your balances closer to the one-third level.
Finally, don’t apply for any more credit. Each time a
consumer applies for a credit account it is logged into the credit report as an
“inquiry.” Multiple applications for credit will cause scores to fall and could
suggest to a lender the individual is experiencing some financial difficulty.
If you simply stay still and don’t apply for credit accounts and eliminate any
inquiries your scores will rise.
If you concentrate on these three things, which by the way
make up 75% of your total score, your scores will begin to rise on their own.
And it doesn’t take as long as you might think. In fact, within just three to
six months your scores could repair to a level that qualifies you for a home
For more information or questions about mortgage loans, please call (855) 757-8748.