My Credit Rating- Not Just a Score
Many people have heard that a credit rating is a score offered on your
credit report to lenders. This is not true. One aspect of a credit rating
is the score, but there is actually a lot more that goes into the
decision.
First, the credit score itself is a physical method developed to give an
overall picture of a borrowers potential credit worthiness. Scoring
tends to Range from about 350 to 850, with a higher score being
better. The average score considered a target is somewhere in the
mid 600s. However, there are many factors that go into a score, and
sometimes a small imperfection can have a much bigger impact on a
score than it should. This is why there are many other aspects to your
credit rating.
Your credit rating is also based on the actual length of time you have
had accounts, your payment history on those accounts, how much of
your available credit you have available, as well as many other
factors. Mortgage Lenders also look for other factors, such as if you
have been renting previously, if your payments are verifiable, how
much your monthly living expenses are going to go up...etc.
Your credit is very important, and if you choose the right person to
work with for your mortgage, they will be able to give you guidance on
clearing up any issues you may have. All you have to do is ask!
Note– many times we in the industry will hear someone say they are
about to close all their credit card accounts to help their credit score.
This may not be the best idea!!!! As mentioned above, your credit
score is determined by some factors including how you manage
available credit, INCLUDING open credit lines with $0 balances!!!
These accounts make it look like you are in control of your finances!!!!
Closing them can demolish your credit score!!!! Think about it…. An
account you have had for 5 years with no late payments and you don’t
have a large balance on it….. Looks like a winner to me (and to the
credit scoring system)
The Mortgage Info Site.com
