1. IS IT TRUE THAT RUNNING CREDIT REPORTS CAN REDUCE YOUR SCORE?
Fico.com states that it doesn’t if it is a same industry report. Experience tells me differently. The good news, if it is less than 3 in a 90 day period, it doesn’t change it at all. If you run 15 in one week you will lose 2-4 points for each report run.
2. HEY, I KNOW MY SCORE; I RAN IT ON THE INTERNET. ISN’T IT THE SAME?
Not so much. The online version is close to the real thing, but not quite. If you really need to know, have someone in the mortgage industry run it.
3. I HAVE BEEN WORKING ON MY CREDIT. WILL MY SCORE EVER IMPROVE?
Late pays affect the score by the number of lates, how long they were late, and more importantly, how recent were they. It is hard to quantify the damage multiple lates have on score. If the lates have been more than 2 years, they have a much smaller affect on the score.
4. IF YOU HAVE HAD PERFECT CREDIT ALL OF YOUR LIFE, WILL YOU HAVE A PERFECT SCORE?
Nope! One of the worst calculations that go into credit scoring is the ratio of credit used versus the credit limit. The closer you get to 100% of your credit limit, the more points you will lose.
A card with a $100 limit and a $99 balance will lose you about 15-18 points. If that same card has $101 on it, you will lose about 25 points. Throw on a past due, and now you are talking about some serious points.
Ideally, you would never want your balance to exceed 50% of your limit.
5. SHOULD I CLOSE OUT MY OLD CARDS TO GET A HIGHER SCORE?
Again, NO! If you want a higher score, go out and use those cards just a little bit. Put $20 on a $1000 card will score some points.
The longer you have had a card or loan, the more it adds to your score.
6. HOW DO I GET A PERFECT SCORE?
I don’t know. I have run thousands of reports and have never seen an 850.
Other than the obvious (paying everything on time) and keeping credit balances less than 50% of the limit, time. I have only seen one score of 847. She had credit established for 30+ years, no lates and minimal balances on credit. To top it off, she was a real estate agent.
Fico.com states that it doesn’t if it is a same industry report. Experience tells me differently. The good news, if it is less than 3 in a 90 day period, it doesn’t change it at all. If you run 15 in one week you will lose 2-4 points for each report run.
2. HEY, I KNOW MY SCORE; I RAN IT ON THE INTERNET. ISN’T IT THE SAME?
Not so much. The online version is close to the real thing, but not quite. If you really need to know, have someone in the mortgage industry run it.
3. I HAVE BEEN WORKING ON MY CREDIT. WILL MY SCORE EVER IMPROVE?
Late pays affect the score by the number of lates, how long they were late, and more importantly, how recent were they. It is hard to quantify the damage multiple lates have on score. If the lates have been more than 2 years, they have a much smaller affect on the score.
4. IF YOU HAVE HAD PERFECT CREDIT ALL OF YOUR LIFE, WILL YOU HAVE A PERFECT SCORE?
Nope! One of the worst calculations that go into credit scoring is the ratio of credit used versus the credit limit. The closer you get to 100% of your credit limit, the more points you will lose.
A card with a $100 limit and a $99 balance will lose you about 15-18 points. If that same card has $101 on it, you will lose about 25 points. Throw on a past due, and now you are talking about some serious points.
Ideally, you would never want your balance to exceed 50% of your limit.
5. SHOULD I CLOSE OUT MY OLD CARDS TO GET A HIGHER SCORE?
Again, NO! If you want a higher score, go out and use those cards just a little bit. Put $20 on a $1000 card will score some points.
The longer you have had a card or loan, the more it adds to your score.
6. HOW DO I GET A PERFECT SCORE?
I don’t know. I have run thousands of reports and have never seen an 850.
Other than the obvious (paying everything on time) and keeping credit balances less than 50% of the limit, time. I have only seen one score of 847. She had credit established for 30+ years, no lates and minimal balances on credit. To top it off, she was a real estate agent.
By: Tom Renshaw, Century 21 Mortgage Advisor
No comments:
Post a Comment