You wouldn’t believe how common it is! The biggest credit mistake that most of us make is closing our old paid off credit cards. I know that is seems like the right thing to do when you pay off the balance but 15% of your FICO score is made up of your credit history. If you close a credit card with no current balance that you’ve had for years, you are getting rid of a lot of your credit history.
The most important factor in determining your credit score is your payment history. Nothing hurts your credit more than making late payments on any of your debt. It is suggested that if you are used to paying off all your credit cards each month but have fallen on hard times, then it is better to make the minimum payment on each card than to make one late payment.
You should review your credit report at least once a year to ensure there is no erroneous information on it. Credit bureaus are required by law to issue you one free credit report each year upon request. In order to obtain this report, simply request it in writing from the credit bureau.
Many loan programs have rate adjustments for lower credit ratings. There are some loan programs, such as FHA loans, which are not credit score sensitive but rather look at your overall credit picture.
There are three different credit report bureaus. They are Trans Union, Equifax and Experian. Each bureau will report a score based and many variables. If you have a limited credit history you may not have three scores, you may only have one or two.
When applying for a mortgage, credit scores are one of the main factors that will be used to determine your eligibility for various loan programs. The higher your score, the more options you will have.
If you have a minimum of 20% to 25% equity in your property, in certain cases we can approve you for a loan with no credit scoring based solely on your good mortgage payment history and liquid financial reserves.