We all know the importance of a strong credit history but many haven’t the foggiest idea of how to work their credit to make it look as good as possible.
Particularly when shopping for a home your credit will be evaluated primarily based upon the credit scores. These credit scores are generated when credit reporting agencies access your credit history.
The reality is most people don’t have the foggiest idea of the makings of their score. Most people think credit scoring is mainly about payment history.
Although a good on time history of payments is no doubt very important to a good credit score it is far from being the total picture. Other equally important factors play a role to complete the picture.
Since we started with payment history you should be aware that you’re not late until thirty days post the due date. Keep that in mind when in a pinch. You pay all the way up til the end and still have a clean payment history.
Keep low balances relative to your available credit. If you keep a five dollar balance and you have $1,000 limit is better than a $5 balance and a $10 credit limit.
You definitely don’t want to be maxing your cards out. That is bad juju, even if you pay them on time.
A lack of credit history typically works against credit scores. Do yourself a favor and get 2 or 3 slats of plastic. Start using them immediately and pay on time of course.
Do this in moderation. You don’t want to go out and open a whole plethora of trade lines. This may be seen as a move to use a bunch of debt.
Make very moderate purchases with your small number of cards and be sure to pay the entire balance off by the end of the month. In a year you won’t believe your scores.
As far as credit bumps, bruises and scrapes, the more time they exist in your past the better your scores. If even considering looking for a home be extremely careful. Just one recent 30 day late can kill scores.
The scoring system is logical. Be logical when sculpting your credit and watch your scores rise.
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