The Truth About Credit (Score) -

The Truth About Credit (Score)

Will applying for a loan lower my score?

The Truth: Auto and Mortgage inquiries pulled over a short period of time are treated as a single inquiry and will have little if any impact on your credit scores. However, a lot of credit card inquiries make it seem like you are getting ready to possibly overextend your credit, so pick the 2 or 3 credit cards you want to use and stop shopping.

How can I raise my score?

We compiled a list of the most important (though not the only) factors that can affect, raise or lower your credit score. Since these are all factored in by any lending agency, you should adhere to all of them.

5 factors affect your score:

Pay your bills on time. Your payment history affects your score about 35%. If you have the option, set up automatic payments online and stay on budget.

Your revolving balance of unused credit affects your score about 30%. Keep credit balances at 30% or less. The cards and balances that are close to the limit will cause your score to drop. Many times just lowering one big balance down under 30% of the credit limit will change you score significantly. If you can’t afford to pay them all down or off, paying these down one at a time is usually the best strategy.

Don’t cancel credit cards. 15% of your score is based on how long you have had your accounts open. An account you have had for 2-3 years with a zero balance is much more valuable to your score than a new one with a zero balance. So just pay them off and put them away, don’t cancel them.

10% of your score is factored by the number of credit inquires. A lot of credit card requests makes you look desperate and headed the wrong way. Multiple auto and mortgage inquiries won’t hurt your score, but credit cards will. So don’t apply for too many credit cards.

The type of credit you use affects your score by the other 10%. Secured loans like autos and mortgages have a positive effect. On the other side of that, unsecured loans or credit lines such as student loans, credit cards, or signature loans will have a negative effect on your score because they are considered riskier.

How long will it take to raise my credit score?

If you have the money to work on the 5 factors and pay things down now, your score will rise almost immediately.

However, if you’re like most of us and need to do it over time, it will take just that, time. Most lenders, in addition to your score, are also looking for at least 12-24 months of perfect payment history.

So in addition to your credit score, most creditors will also make interest rate and length of term decisions based on reviewing the number of months/years that your payments have been made on time.

Typically most lenders require a two years period with all payments made perfectly to count toward a good credit rating.

So in order to achieve the maximum interest rate benefit found by your improved credit scores and payment history, there is no time like the present to start paying attention to paying your bills.

Are you ready to move forward with a purchase or refinance? Please give us a call at 888-810-1459 and let us help you secure financing for the purchase of a new home or save you money on the refinance of your existing home. Be sure to ask your loan officer about our closing costs incentives and our low rate guarantee!

Disclaimer: The information contained in this article has been prepared by an independent third party and is distributed to consumers for educational purposes only. The information is considered reliable but not guaranteed to be accurate. The opinions expressed in this article do not represent the opinions of Skyline Home Loans. Please consult with a licensed loan officer for expert advice regarding financing or refinancing. For advice regarding your credit report and credit scores contact a licensed credit repair specialist.