by | Sep 24, 2019 | Featured

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Did you know that a low credit score when buying a home could cost you as much as $40,000 over the life of a mortgage?

Here are the top three things that you should know about how to improve your credit. Number one, and it should be very obvious, pay your payments on time.

On time payment history represents 35% of your credit score. You need to stay current on all of your payments. The number two thing is 30% of your score is the available credit that you have and how much you use. As an example, if you have a credit card that has available 10,000 and you borrowed 5,000 this could actually hurt your score. You want to borrow 35% or less of your available credit. So in this scenario borrowing 50% of your available credit hurts your score. So, if you paid that down just 15% more, it could improve your score by as much as 40 or 50 points. The number 3 thing is you want to make sure you have a mix of credit cards and maybe other types of loans, small car loans or small student loans. Here are the top three things that can hurt your credit score. Some should be obvious, like not making payments on debts that you owe, including and especially the IRS.

The IRS may not show up in credit, but believe me, the mortgage lenders are going to find it. The second thing is not borrowing any money. Yes, that’s correct. If you don’t borrow money, you don’t have a credit score. And then the third worst thing you can do as those debt consolidation loans.

Here are the two top myths about credit score. If you apply to more than one mortgage lender within 30 days, some people think it hurts your score, but it won’t. It’s a new law that people shopping for a mortgage can talk to several different lenders within 30 days and it will have no affect on your credit score.. A lot of people think they should close out the credit cards of their old credit cards if they’re not using. Closing out old credit cards or lines of credit can actually hurt your score.