By Brian VerBurg #CreditScore #Mortgage #CreditReport #MyFico
Having a great credit score will save you money on everything from credit cards, to car and home loans, and anything you want to finance.
If you score is not in the 700’s or above you can likely get it there with just a little work and a little time, usually under 6 months is all that’s needed to see a huge improvement.
First step, you need to check your credit and see if you have any outstanding issues. All 3 national credit bureaus (Experian, Transunion, and Equifax) give a free annual credit report here https://www.annualcreditreport.com
If you have any outstanding collections or charge-offs (judgements no longer show on credit reports) try and dispute them even if they are legit. I have seen many clients dispute collections that they knew were valid and still get them removed. Mailing disputes is a thing of the past. Now, all 3 bureaus have a very easy online dispute process. Go to each of their sites, register, and then dispute anything derogatory- collections, charge offs, and lates. Many creditors would rather let you win the dispute then take the time to prove it’s valid (especially if its older).
If you don’t have much credit, get some. For a good score you need at least 3 items reporting. If you don’t have 3+ items get credit cards or store cards when you go to Home Depot or your favorite clothing store. Credit karma is a good place to get credit cards and if you are not approved, get a secured credit card. Anyone can get secured credit cards no matter what your credit looks like. Then, after a while they will allow you a regular credit card.
35% of your score is determined by your payment history. You will not get a late on your credit report until an account is 30 days late. That’s plenty of time in case you have an oversite or mishap- just make sure you don’t go beyond 30 days late. Any 30 day lates in the past 12 months will hit your FICO score hard. After 12 month it will not hurt your score nearly as much and after 24 months it hurts very little.
30% of your score is determined by how much you owe. Car loans, mortgages, student loans, and any fixed payment loans don’t really matter once they are seasoned for a little time (that’s the 10% for “New Credit”). The big factor in this category is your revolving debt (credit card) balance compared to your limit- of each card. If you have a $500 limit on a credit card and owe $490, your score will go down dramatically. However, if you have a $10,000 limit and you owe $2500 it will barely affect your score. The amount it affects your score is determined by the percentage of what you owe compared to the limit. Under 30% is great. Under 50% is not too bad. Over 70% starts to lower scores quite a bit and when you are over 90%, or even worse over the limit, your scores will plummet.
The 10% for “Other Factors” is largely made up of your credit mix, meaning for the best FICO you need a good mixture of installment loans (car payments, student loans, fixed payment loans, etc.) and revolving debt (credit cards). Mortgages help too if you want the perfect score.
If you have any questions or want help with anything on your credit report feel free to reach out. We are here to help. You can email me brian@GrandLendingCA.com or visit our site www.GrandLendingCA.com