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Buying a Home in Colorado Springs, manage your most valuable asset! Part V
Colorado Springs Vintage Homes is happy to feature another great article
on Managing Your Credit Score – Part V
Anza Goodbar, President of Clearview Mortgage
For a free Buyers Guide, Email Kathy Torline at KTorline@msn.com
Previous Posts by Anza:
- Tips for Colorado Springs Consumers – what is identify theft?
- Want to buy a home in Colorado Springs, manage your most valuable asset!
- Buying a Home in Colorado Springs, manage your most valuable asset! Part II
- Buying a Home in Colorado Springs, manage your most valuable asset! Part III
- Buying a Home in Colorado Springs, manage your most valuable asset! Part IV
- Buying a Home in Colorado Springs, manage your most valuable asset! Part V
Your Credit and You!
Let’s take a look at the final category that impacts your credit; the type of credit you use.
Types of Credit Used:
While this area has a lesser impact on your credit score, it is still important. The credit reporting formula is complex and takes many factors into consideration when calculating your score. It looks at the types of credit you have, the number of accounts you have and the mix of accounts.
There are two basic types of credit:
- Revolving
- Installment
Revolving credit is a credit card, a retail account or an account with a financial institution that is based on a credit limit. These accounts require you to manage your credit limit without going over it. If you exceed your limit, this will cost you points on your credit score and your creditor may assess an over the limit fee to discourage this behavior. Missed payments on a revolving account can cost you 20-30 points.
Installment loans consist of mortgages, auto loans or student loans. This type of credit is based upon an agreed amount and divided into a specified number of payments. As you make payments the balance decreases. At the beginning of this type of arrangement you may see a reduction on your score, once you pay your balance down to 80% or less, you will start to see your score increase. Missed or late payments on one of these accounts can cause a dramatic score reduction (up to 40 points per incident).
The type of credit you use can impact your ability to get financed for a home if you don’t’ use it responsibly. If you have been turned over for collections for unpaid child support, you must be able to prove that you are current. If have are late or in default on a student loan you would be required to bring the account current or pay if off in it’s entirety.
Now, let’s take a look at what we can do to remove incorrect data or make corrections to inaccurate data.
Written by Anza Goodbar, President of Clearview Mortgage Have a question? Contact Anza
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If you enjoyed reading this article, why not Kathy (719-287-1049) KTorline@msn.com
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