It is no secret that the better your credit history the better your interest rate will be purchasing cars, furniture or a home using a mortgage.
Particularly when shopping for a home your credit will be evaluated primarily based upon the credit scores. These credit scores are generated when credit reporting agencies access your credit history.
Were all aware of this, but few of us really know how these scores are generated. Most think the scores are just about payment history.
The truth is payment history plays only one role in the makeup of an individual's credit score. Although we don't know the full proprietary recipe we do have some idea of the importance of each.
Here is what we do know. You obviously need to keep a clean payment history. Remember, companies report you late only when you've exceeded thirty days past your due date.
When you have lots of available credit which is relatively unused it looks better on your scores. It basically means you have discipline and cushion to fall back on if in need.
You definitely don't want to be maxing your cards out. That is bad juju, even if you pay them on time.
Credit scoring likes some open credit. So, if you are credit averse and don't have hardly any trade lines open, go get two or three.
Be careful about being too aggressive getting cards. You don't want to all of the sudden get 20 of them. The system could perceive that as an attempt to run up credit.
Make very moderate purchases with your small number of cards and be sure to pay the entire balance off by the end of the month. In a year you won't believe your scores.
Lastly, if you do have derogatory marks try your best to make the blunder as far away from the home purchase as possible. The longer your derogatory marks season the better your scores get.
These are just some basic tips. Be sensible about how you develop your credit and your scores will go to the moon.
Particularly when shopping for a home your credit will be evaluated primarily based upon the credit scores. These credit scores are generated when credit reporting agencies access your credit history.
Were all aware of this, but few of us really know how these scores are generated. Most think the scores are just about payment history.
The truth is payment history plays only one role in the makeup of an individual's credit score. Although we don't know the full proprietary recipe we do have some idea of the importance of each.
Here is what we do know. You obviously need to keep a clean payment history. Remember, companies report you late only when you've exceeded thirty days past your due date.
When you have lots of available credit which is relatively unused it looks better on your scores. It basically means you have discipline and cushion to fall back on if in need.
You definitely don't want to be maxing your cards out. That is bad juju, even if you pay them on time.
Credit scoring likes some open credit. So, if you are credit averse and don't have hardly any trade lines open, go get two or three.
Be careful about being too aggressive getting cards. You don't want to all of the sudden get 20 of them. The system could perceive that as an attempt to run up credit.
Make very moderate purchases with your small number of cards and be sure to pay the entire balance off by the end of the month. In a year you won't believe your scores.
Lastly, if you do have derogatory marks try your best to make the blunder as far away from the home purchase as possible. The longer your derogatory marks season the better your scores get.
These are just some basic tips. Be sensible about how you develop your credit and your scores will go to the moon.
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