We’ve been doing a series on Credit Score Basics, and how to get the best credit score… and we’ve packed this website with information on how to raise your credit score so that you can buy a house in NC. A Mortgage Credit score, means that you will need (for MOST programs) a minimum credit score of 620, with best pricing for those with credit scores over 640.
Maximizing Your Balance for the BEST Credit Score
The current credit models suggest that the difference between the balance on your credit cards, and the available credit on that credit card (or credit limit), will make a difference in your credit score. With regards to how much your balance should be as compared to the actual high limit… the current model says that 20% – 25% of available credit is the optimum number.
So keeping a zero balance on all of your credit card debt will NOT help your score! You need to have about a 20 to 25% ratio.
Dusting off your “older” cards will raise your scores as well. They must be used every 6 months to count in your credit score. If you want to pay it off every month that is Okay – but use the card every 6 months or so. Also, the type of Credit Cards you are carrying a balance on can affect your credit score.
If you don’t have a long history of credit – then inquiries and the number of accounts you have are more important. Inquiries stay on your report for 24 months, but they impact your score for only 12 months.
Again, if you are “new” to credit – you also want to be sure you have at least 3 trade lines and it would be a good idea to have a mix of revolving and installment debt. Sometimes Credit Unions will only report to ONE of the three repositories – ask your credit union before you seek them as the only credit card you have. You need a history of at least 6 months on all 3 repositories.
Scoring Models do react favorably to paying ahead your installment debt. Not only does it like the fact that your high balance and current balance are further apart, the scoring model appreciates the willingness of the consumer to pay your debts off faster!
Transferring debt to a new Credit Card might make perfect sense – however from your score perspective, for the first 6 months of having that new account your scores will not improve. Do not close the old account, keep your 30% balance on the new card…
Your Home Equity Line of credit could be hurting your credit score! If you have a credit limit on your equity line of $75000 and you are USING $60000 – well, that’s not a 30% balance! I’d never really seen this make a difference until lately…
If you want to improve your credit score – contact Steve Thorne, NC Mortgage Experts 919.649.5058 There are several mortgage programs available that require only 2 credit scores at or above 600 to purchase a home in NC