For todayâ€™s home buyers and refinancing households, the value of â€œgood creditâ€ has never been higher.
Mortgage approvals hinge on your FICO score, as does your final mortgage pricing.
If youâ€™re shopping for a home in Parkland or Coral Springs Florida ,
therefore, or contemplating a refinance, be aware of how everyday credit
behaviors can affect your FICO. Even small events can make a big
Here are some common-sense steps to help improve your credit score.
First, keep a â€œcushionâ€ on your credit cards.
30 percent of your credit score is linked to â€œAmount Owedâ€ and a big
part of Amount Owed is a raw calculation of (1) What you owe in dollar
terms, against (2) How much credit you have at your disposal. The credit
bureaus want to see at least 70% of your credit â€œavailableâ€.
If you can keep your cards at least 70% available, your credit scores should improve.
For example, if all of your credit cards give you access to a
combined $50,000 and you are using $10,000 of that available credit, you
have 80% of your credit available to you and this is â€œgoodâ€.
Raise your balances to $30,000 and this is â€œbadâ€.
Second, donâ€™t make major purchases on credit prior to making a
mortgage application. This includes opening a store charge card to save
10 percent or more on a washer/dryer set, for example; or for any other
appliance or furniture piece.
The reasons why are two-fold. One, store charge cards are often
opened with a limit matching your initial charge, rendering them 100%
utilized. This is bad for a FICO, as discussed above. And, two, opening a
new charge card has a negative FICO impact anyway.
Charge cards are associated with high default rates.
Third, make all of your monthly payments on time â€” even the ones in
dispute. You may not want to pay that $80 wireless phone bill, for
example; the one that you think you owe, but remember that Payment
History accounts for 35% of your credit score. Even one late payment â€”
or payment in collection â€” and your credit score can drop.
Itâ€™s often less expensive to pay a bill in dispute than to be
relegated to a higher mortgage rate. The payment in dispute can be
remedied today. The payment on that mortgage rate lasts for 30 years.
Click here to Search Parkland Homes
Click here to Search Coral Springs Homes
Click here to Find Out What your Home is Worth
View my listings at http://www.jonklein.com
Click here to search all Parkland Homes for sale