Actions that will influence your credit scores
Every time I do a mortgage for a client, I need to obtain a full credit report. These reports are a compilation of all of the borrower’s actions, or inactions, where it comes to paying their bills. In addition to having an income that will be sufficient to service the debt the borrower needs decent credit. Just because a borrower has less than average credit does not mean they will not get a mortgage, but it does mean that the mortgage interest rate will be higher. And in some cases that mortgage interest rate will be a lot higher.
So, since a borrower’s credit history is very important to the process of borrowing on a mortgage, you should know what to do and not do to get your credit scores higher than they already are!
Here are reasons your credit scores are what they are:
1. Late payments ” One 30-day late payment on a credit card will hurt your credit scores. They may drop 15 to 30 points. If you have a 30-day late payment your scores can drop as much as 100 points. Make sure you pay your debts on time, even if it is only the minimum payment.
2. High balance on your credit cards ” Never max out your credit cards. If you do the computer that figures your scores will be unhappy, and we do not want an unhappy computer.
3. Applying for too much credit ” You really only need two or three credit cards. Ten cards open and with balances will reduce your score. Plus, why write 10 checks a month when you can write one or two.
4. New charge accounts ” get a credit card or two and keep them. Do you really need to apply for every card available to you? The longer you have a record with a card company the better. Especially if you pay the bill on time.
5. Court judgments ” If you were sued in small claims court and you have not paid that bill, pay it today. It is bad to have a late payment on a credit card, but it can be the kiss of death to not pay a court ordered payment. Plus, get a written statement from the court itself documenting that the payment has been paid in full.
6. Lack of credit ” Some potential home buyers have little to no credit history. I commend all of those people who try to go through life not owing anyone anything, but no credit history is not a good thing when applying for a mortgage. I suggest that you apply for one credit card, and once approved, buy a super-sized meal once a month and pay off the bill in full each month. After a few months apply for one more card and do the same with that card.
Remember, your credit is just that, your credit. It is your responsibility to have good credit and to know that with good credit getting even more credit is easier.
For answers to your mortgage related questions, call BOB KIEBER at (970) 262-1199 or e-mail him at firstname.lastname@example.org. Bob is a local mortgage banker and principal of Resort Lending. He has 30-plus years of professional experience in real estate, finance and investments, and is a ongtime resident of the High Country.
Summit County Colorado Real Estate
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