What affects Credit Score and By How Much?
Best refinance mortgage loan rates go to homeowners with good credit score. Credit worthiness of a loan applicant is one of the first things mortgage lenders check. Find out what affects credit score, avoid them and improve your score. Avoid these credit problems, if you want a good credit rating;
- Late payments. Late payments are the common pitfall. Paying bills, mortgage, loan and credit card payments late or staying behind reduces score up to 100 points. These are seen as signs of financial trouble by the lenders.
- Failing to pay the bills long enough for lenders to go to debt collection agency. It is a bad sign. No lender wants to deal with people like that.
- Running out of credit. Spending all available credit on credit cards will lower score by as much as 50 points. Sometimes, getting another credit card with high spending limit and paying down some of the other cards may help improving the score.
- Foreclosure lower homeowner’s score by about 150 points.
- Bankruptcy reduces the score over 200 points and stays on person’s record 7 to 10 years. The person must disclose that he has been made bankrupt each time he applies for a credit. Guess what the outcome would be.
- Debt Settlement will reduce credit score by over 100 points. Some people may think that they had one over the credit card companies by paying next to nothing for their debt settlement. They must think again.
People can improve their credit score by sorting a few things in the list. First they need to get their credit report and score. Look at their affairs in detail and find out where they have been going wrong. For example, they can start keeping up with bills and/or lower their credit card outstanding balance. It should show its effects in 3 months. They should keep checking their score all the while. Then, they would be able to qualify for better refinance mortgage or loan.
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