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Optimizing Yours

  • You monitor your FICO scores closely
  • You regularly pull personal reports that don’t affect your score
  • Then you apply for a real estate loan, the lender pulls your credit and your scores are almost always lower than the ones you see regularly.

Why are mortgage credit reports pickier than consumer reports? Risk factor.

  • Buy items in a retail store and likely finance hundreds to several thousand dollars
  • Buy a new car and pay $25,000 to $90,000 or so.
  • Buy a home and you could finance hundreds of thousands to millions of dollars.
  • Mortgage scores are more particular as their risk factor is greater based on the size of the funds being loaned.

So what factors affect your credit scores?

Many things can affect scores.

  • Making payments on time is key to higher FICOs.
  • Another thing that affects your scores are your use of credit lines.
    • Rule of thumb, you should use less than 30% of your credit line. (IE if you have a $10,000 credit line on a credit card, putting a balance of $3,000 or less on the card will actually improve your score. Increase it to $3,001 and it will detract from your score.
  • Car payments and other debts paid on time, and not adversely affecting DTI (debt to income ratio) will improve your FICO scores as well.

With so many free ways to monitor your credit, it pays in lower interest rates in a variety of arenas to stay on top of yours.

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