Read below for helpful information on what helps and hurts your credit score.
Two of the most important things that affect your credit score are:
Payment History: One of the main things a Florida mortgage lender looks at before approving you for financing is how long you have had credit and if your payments have been on time. They also want to see that you have been able to maintain a good payment history on all types of credit accounts.
Account balances and available credit: Do not max out your credit limits. If you use more than half of the available credit it could result in a lower credit score. Being maxed out on your accounts could lead to late payments in the future and therefore, makes you a higher credit risk to the lender. The following 3 items also play a role in calculating your credit score.
How long you have had credit: It takes time to build up your credit score. Each year that passes that you have shown a good payment history, the higher your credit score will go. A person who has maintained several accounts for at least 10 years and has had a good payment history can expect a great credit score.
Multiple New Credit Accounts: Avoid opening several new accounts in a short period of time because this can lower your credit score. Having multiple inquiries on your credit score will also drop your score.
Credit Types: Ideally, you want a mix of credit accounts including: revolving accounts, finance company loans, installment loans and mortgage loans. This will show potential creditors that you are able to manage all types of credit that is extended to you. Just keep in mind that regardless of the type of credit; more importantly is the pay history and the account balance in relation to the credit limit.
The individuals which have credit scores over 800 generally have the following things in common with their credit:
• 4-6 credit card accounts
• No late payments in the last 7 years
• At least one installment loan (mortgage or car) with excellent payment history
• An average of 10 years credit history and a few accounts with 20 years of good history
• Low number of credit inquiries (less than 3 in a 6 month period)
• No bankruptcies, foreclosures, judgments, charge-offs or collections
• Debt limits at no more than 35% of their overall credit limits per account
These are just tips on how you can get and maintain a great credit score. However, if your credit is not great right now, it can be in the future if you work at it. Do you have questions about if your credit will qualify for a Florida home you want to buy? Call me at 561.291.2831 or email me me to discuss your credit and to see if you will qualify for a Florida home loan.
