Is It Truth or Myth About You Credit Scores?
If you are looking for Credit Score Repair in Folsom & Greater Sacramento, read this!
The dreaded FICO score. It’s that number that’s associated with every credit report. We all know about it—most people have one—but what does the credit score really mean?
We met up with Jeff Sipes, Owner of Blue Water Credit in Roseville, CA to dispel some myths about your credit score and expose the truths.
One aspect you may not know is that 30% of your Credit Score has to do with your credit card balance. That’s relation to the credit limit. You want to try to have no more than 10% charged on your credit card about 30 to 45 days before you apply for your loan.
“I pay my bills on time, so my credit score is going to be high.” But, only 35% of your score is your payment history. This includes late payments, collections, and even bankruptcies and tax liens. Each type of account will stay on your credit report a specified period of time and each type of derogatory will hurt your score differently. 30% of your score is credit card balances. So, paying down those balances will maximize your credit score.
“If you pay off your collections, it’s going to disappear.” But, paying off a collection can actually lower your score. Before you pay off all your collections, talk to an expert!
“Every time your credit is pulled, it hurts your score.” If you pull your credit from a website, there’s no impact and if multiple lenders pull credit it only effects the score one time (as long as you’re within the shopping period.) FICO states for a mortgage inquiry, there’s 30 days to rate shop and it effects the score one time and the impact is 1 to 5 points. It is important to note than when searching for a home you are allowed unlimited inquiries over a 15-30 day period since it is assumed you are rate shopping. Inquiries made by yourself or for unsolicited offers do not count against your score, but are shown on your report.
Credit Scores can be a bit confusing and overwhelming, but if you want more information on credit don’t hesitate to call! We are more than happy to help!