RIS Media published a report to teach consumers about how to maintain and improve one’s credit score. Everyone has become more concerned about their credit scores these days, especially when a better score can result in lower credit interest rates and payments saving thousands of dollars from interest. With this in mind, many consumers are paying more attention to their credit and, unfortunately, in the process of trying to make it better, they are harming their credit score.
A consumer credit score is made up of five key components:
35% : Payment History – Types of accounts (credit card, mortgage, etc.), accounts paid as agreed, number of past due accounts, etc.
30% : Amounts Owed – Balances of current loans, debt-to-credit ratio, proportion of installments still owed, etc.
15% : Length of Credit History – Time since accounts opened, last activity, etc.
10% New Credit – Recent inquiries, new accounts, etc.
10% Types of Credit Used – Mortgages, credit, retail, etc.
Here are a couple of pointers that I have been instructed by loan officers that I work with include the following recommendations to buyers of Cincinnati Real Estate to try to optimize your credit score. The first thing is that you should be careful about is using most of your available credit each month. I was told about a situation where the person has a $5,000 credit limit and uses about $4000 of that each month. Even though they pay the card off in full monthly, the individual’s credit score is negatively affected. The credit bureaus advise spreading your purchases over multiple cards or raising your limit on the card you use most often to lower the debt to credit ratio on it.
Another recommendation is to keep cards open even if you do not use them often. You can buy a small item once per month on the card to keep it active. Also it is advisable not to cancel older cards because they help to maintain the length of your credit history. Keeping older cards active boosts your credit score.
Finally, since too many credit inquiries can can lower your credit score it is important to note that inquiries with 90 days of one another for the same purpose do not lower one’s score. So if you have multiple mortgage brokers or car dealerships requesting your credit report, feel free to shop around without worrying that your credit score will be negatively affected.
At The Alison Moss Group, Cincinnati is more than a city to us–it’s our hometown. Since launching in 2008, our clients have depended upon us to lead them through the home buying and selling journey. We are the go-to resource for all of your needs before, during and after the sale of your home.