Just because you pay your debts on time, doesn’t necessarily mean that you will get the best mortgage rate. Credit scores are not just determined on how well you pay your debts, but many other factors and the higher the credit score, the better the rate can be. So, today, I want to examine some of the things other than payment history that affect credit scores:

1. Balance to high credit on revolving accounts. This is often overlooked when considering what helps or hurts a credit score. Most people think it is better to have one revolving (Visa/Master Card) with a higher balance (75% of high credit) and pay it each month, when it actuality, if you have three accounts that are at 25% of high credit, your score will benefit.
2. No interest-no payment accounts. In reality, most of these offers are through finance companies to generate business for them. Finance company accounts effect your credit score negatively.
3. Changing who you are using for your mortgage search ever other month. If you have three mortgage companies all check your credit in a short period of time, it is supposed to count as only one inquiry. So, when you have determined that you are set with your lender, unless there is a major reason for change, stay where you are.
4. Old collections. If you have an old collection on your record, it is best to leave it alone. If it needs to be paid off, pay it at closing. Paying it now will update the account and lower your credit score.

Credit scores are not magic, however, a lot takes place where you can’t see it, as with most magic acts. But if you pay attention to the main points, you can improve your credit. I also assist people in correcting credit problems (at no cost).

These are just a few pointers. If you are applying for a conventional loan, you want a credit score of 740 or better to get the best rate. If you are applying for a government loan, you will want at least a 600 credit score to be able to get it and 660 for the best rate. The government doesn’t set the minimum credit scores, the lenders do and this score could be very different than the one you can get, which is called a “Consumer Direct” score. Additionally, there are three credit bureaus and lenders will use the middle score as the representative score.

I hope you find this information useful. I am always available to assist you in your search for a mortgage loan. Reach me at 541-342-7576/541-221-3455 Cell, or e-mail me at eugeneloanguy@gmail.com.

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