“Ask Your Mortgage
Limited By Your Credit Score?
Your credit score affects many
aspects of your personal life. You can pay thousands of dollars more in interest, fees and severely limit your
financing options because of a low credit score. While we all know
about credit scoring it has often been an illusion as to how they come up with the actual credit
score. Let’s take a quick look at what will influence your credit
Your payment history is based
on your past performance of paying your bills. Paying your
obligations on time and in full will have a positive impact on your credit score. Late payments, judgments and charge offs will have a negative impact on your
credit score. Delinquencies that have occurred in the last 12
months will have more consequences on your score than older items.
Outstanding Credit Balances: 30% Impact
This is based on the ratio of
your available credit limits versus the amount owed on those credit lines. Maxing out your credit limits will have a negative impact on your credit
score. Ideally you should keep your balances to credit limits below
10% of available cash.
The length of time you have
established credit will improve your credit score. A consumer that
has established credit early on in life will benefit more than a newer consumer that only has a few months of
Type of Credit:
A healthy mix of installment
loans (auto loans), credit cards, and mortgages will have a favorable impact on your credit
score. A high concentration of credit cards will have a negative
impact on your credit score.
Inquires: 10% Impact
This quantifies the number of
inquiries that have been made on a consumer’s credit history within a six month period. Each hard inquiry can cost from 2 to 50 points on a credit score, but the
maximum number of inquires that will reduce the score is 10. So if
you have 11 or more inquires in a 90 day period it will have no further impact on your credit score.
Remember, a computer does not
take into consideration any personal factors when calculating your credit score. When your credit report is run it is simply looking at today’s snapshot of
your credit profile. Your credit score can fluctuate dramatically
within a course of a month, depending on your personal credit use and activity. If you are in the market to purchase a home or refinance your current home
consider your credit activity, making sure not to do anything that will have a negative impact on your credit
If you have questions or
comments please email them to email@example.com
Call Andrew today at 573-302-0600.
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