Credit scores are calculated by all of the elements on your credit report. Some of the things that can effect your credit score in a negative way are:
- Late payments
- Delinquent payments
- Charge offs
- Collections
- Bankruptcy
- High balance to credit limits
- Multiple credit pulls
- Multiple names listed on your credit report
- Excessive amounts of credit
- Having loans with finance companies such as American General and Beneficial.
- Large number of open accounts.
Most of these are common knowledge. So lets just hit on a few of the ones that are not so common knowledge.
High Balance to Credit Limits: If you have a $1000 credit limit, and your balance is more than $500 it could effect you in a negative way. The reason behind this is if your balance is greater than 50% of your credit limit, you are viewed as a higher risk. Now having a high balance is not the kiss of death for your credit score... as long as you are making your payments on time.
Multiple Credit Pulls: There are myths and reality to this one. The myth is that you shopping around is going to lower your credit score. It is true but not to the extent that it will make a huge difference. Yes your credit score will go down with multiple credit pulls but unless you have borderline credit, it should not make a difference. To give you an idea about how it could affect you.... Say you were looking to purchase a home with no money down. And you had a credit score of 582. If you absolutely could not come up with a down payment, I would suggest you NOT have your credit pulled even 1 more time. If the Loan Officer had you pre-approved and you continued to shop, then multiple credit pulls could drop your score just enough that it could make the difference between renting and owning. If you have higher scores, then a few points are not going to make a difference if it does drop.
Multiple names listed on your credit report: Believe it or not. Having multiple names on your credit bureau could affect you in a negative way in the sense that they look at it as you are trying to create an alias. Some examples of multiple names are
- Richard Kevin Thomas
- Richard K Thomas
- Richard Thomas
- Rich Kevin Thomas
- Rich K Thomas
- Kevin Thomas
- Dick Thomas
- Dick K Thomas
There are many ways that you can write your name, but you need to stick with one or two of them. Try to avoid signing and filling out applications with multiple names.
Having loans with finance companies such as American General and Beneficial: These companies can affect your score in a negative way. They generally charge higher interest rates, therefore making it more difficult for people to make payments on time. However; if you pay these accounts on time, they will most definitely affect your credit scores in a positive way. Just be prepared for the interest rate shock.
Your Local Mortgage Services:
Don Frazier
Mortgage Consultant
Office: 765-446-2930
Email: dfrazier@tippecanoemortgage.com
Website: www.IndianaMortgageMan.com
Mortgage services for Greater Lafayette and West Lafayette Indiana, Purdue University, Tippecanoe County and the surrounding Indiana Communities. We are a Local Company with a National Reach! Visit my website for great home loan information: http://www.indianamortgageman.com/
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