How to improve your credit score?

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There are 5 factors that could affect your credit score
  • 35 percent from payment history: Make sure you pay on time, do not carry any credit card balances, and have no delinquent accounts,  bankruptcies or similar against you.
  • 30 percent from credit utilization: Try not to max out your credit line every month, keep it below 70% is ideal.  It is also good to make two payment in each credit card billing cycle to build a strong repayment history and also to avoid missing or late on any payment.
  • 15 percent from length of credit history
  • 10 percent from types of credit used: Usually homeowner with mortgage and person with auto payment, either purchase or lease, will have higher credit score because they can demonstrate that they have a strong repayment ability.
  • 10 percent from new credit: Try not have too many credit inquiries, especially when you are planning to buy a home with a mortgage.

Keep your oldest credit cards

As mentioned above, credit history accounts for about 10 percent of your credit score calculation. It is good idea to keep at least one credit card that you never close.   It is ideal to keep the one with no annual fee because you might not have a chance to use it too often.

Stop applying for new credit cards about six months to one year before applying for a mortgage or major loan

When you have too many inquiries, the lender will request a lot of explanations.  Sometimes could result lender declines your loan application.  Avoid it!

Also, make sure you keep your outstanding credit balance as low as possible or pay it off monthly when you are applying for a mortgage or major loan.

* Message from your Real Estate and Mortgage Broker, Andy, 408-218-2513

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