I had the pleasure of meeting today with my local representative from my credit bureau, with Fannie Mae and Freddie Mac shifting over to risk based pricing and increasing the expense of the mortgage in a tier like fashion starting below 680 credit score it is crucial that we all educate everyone on the increase expense of doing mortgages that ultimately the homeowner will pay for if the credit score is below that.
Maintaining a credit score of 680 or above will save you when it comes to your mortagage rate any rate below that is going to incur an additional cost in some way.
Some advice on keeping your credit score above the new magic number 680 -
1) Find out where you are now, if you have been denied credit obtain a copy of the denial that will have instructions on obtaining a free copy of your credit report, or go to the free credit report website that allows you 1 free credit report per year.
2) Watch the credit limits - I advise my clients to watch their credit limits - since the model scores based on consumer behaviour - red flags go off and scores come down if the credit card is constantly bumping into the ceiling or credit limit. The solution never ever call the credit card department and ask them to lower your credit limit if they raise it divide that number in half and never go above it - its the 50% rule if you keep your credit usage on cards below 50% of what your credit limit is the model then reads that your handling credit and not having to rely on most of the credit thats availalbe to you.
3) NO LATES - it goes without saying but - never ever go over 30 days if at all possible on an account you have.
4) Keep the inquiries if at all possible to a minimum - would it really be worth the 10% off at the retail shop for that one time use credit card that is going to hit your credit if you apply?
These are just a few suggestions I give my clients.
Darren Stewart
OakStar Bank NA
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