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2020-02-10 17:58:58
Credit and Your FICO Score


Often people will try improving their Credit Scores by Closing Credit Accounts once they pay them off. Which is one of the worse things that you can do if you are trying to bring your Credit Scores up. I recently had a conversation with a friend that was closing her Fee Credit Cards and switching to Rewards Credit Cards with no Fees. She thought by closing her American Express Card once paying it off. That her scores would go up but its in fact they ped 50 points. She posted on Facebook what she did and I called her to explain that your Credit Scores are judged by how much available credit that you have. When you pay off your credit card or account and close that account. You reduce the amount of available Credit you have. Which raises your Debt Ratio. She would have been better served by transferring the Balance of that Card to another card of her choice and then closing the account to avoid paying the fee. That way she could get Reward Points without the Fees and raise her FICO Scores.
When applying for a Mortgage Lenders ideally want you to have 30% Debt Ratio or less. Meaning that you owe 30% of your Gross Monthly Income before deductions. But depending on your Credit Score and the type of Loan they may let you go as a 40-45% Debt Ratio but you will likely pay a Higher Interest Rate.
If you want to work on improving your credit you can contact me directly for suggestions. I have a friend and client that does Credit Repair Services. If you are looking to improve your credit to Buy a Home? I can recommend lenders that depending on your situation they can give you tips based on what Lenders look for in your credit report to help you qualify for your next home faster. Too often offer these services and people say its okay an can do it myself and they end up floundering for years. When with proper guidance they can improve their Credit enough to buy a home in a year or less?
Also please click on the following link to see the new Guidelines for FICO Scoring. And remember you have to have debt and show a record of making payments to get credit. Its how smartly you manage your credit that counts.

FICO Changes
 
Blog Archive
2020-02-10 17:58:58
Credit and Your FICO Score

2019-10-30 11:43:07
How to Determine if You Can Buy A Home

2019-05-28 12:15:56
Buying a Short Sale? Keep This in Mind

2019-03-18 08:18:59
Tough Buyers Market

2019-03-14 06:51:22
Manassas - Prince William County's Hidden Gem

2019-03-14 06:46:19
Why You Need A Buyers Agent?

2019-03-13 14:58:33
Don't Sabotage Your Home Purchase - Things To Not Do


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