Tips For Better Credit Rating
Your Credit Rating is the key factor in the type of interest rate a lender will extend
toward a mortgage application. Here are five tips that will help you improve your credit scores.
Payment History. Your
payment history accounts for approximately 35% of your scores. Lenders are concerned with how you paid your financial
obligations and whether you paid on time. Paying your bills on time is the single most important thing you can do to
raise your score over time.
Amounts Owed. The
amount of money you currently owe accounts for about 30% of your scores. Owing money doesn't mean you're a high risk.
However, high balances or maxing out your credit limit may look as if credit is controlling you instead of you controlling
it. Try to keep the balance owed well under 50% percent of your limit.
Length of Credit History. The
number of months an account is open contributes about 15% of your scores. If you have revolving charge cards that you
no longer use, you may not want to cancel them. Using them once in a while will keep them active and will increase the
lenght of your credit history record.
New Credit. New credit
accounts for approximately 10% of your scores. Opening several credit accounts in a short period of time can lower your
score as it represents a greater risk to your lender. Each time you apply for credit a lender request a credit report
called an inquiry. A lot of inquiries in a short period of time will lower your credit scores. Try to refrain
from opening credit accounts in a short period of time and limit the number of inquiries that will lower your scores.
Types of Credit In Use.
Types of credit determines 10% of your scores. Whether you have three credit cards, a mortgage and two auto
loans or you have two retail cards and one installment loan does not matter. Scores are rated on your mix of credit
accounts and how many you have of each type. It is not necessary to have one of each to get a high score, though a good
track record with different types of credit will help. Only open new credit accounts that you need. If you set
out to apply for a wide variety of credit types in hopes of raising your score, it can backfire and actually lower your score.
If you follow these tips and apply the information to your own credit situation,
lenders will look at how you are managing your credit and look favorably on the credit report. This is not a guarantee
that you will get a low interest rate, but may have the impact of improving your existing credit scores to a higher level.
Loan Application Tips
Here is a list of documents you'll need to apply for
a loan:
1. A list of your financial obligations.
2. The addresses of your past tow residences.
If you rented, include the name of your landlord. If you owned your home, include the name of the mortgage holder.
3. The names, addresses and phone numbers of all
your employers for the past 2 years.
4. Your most recent pay stubs for 30 days and W-2
tax forms from the past 2 years.
5. Any documents that support your claims
of income from sources such as Social Security, pensions, interest and dividends.
6. If you're self-employed, two complete tax returns
for the past 2 years, plus financial statements for both the company and yourself.
7. A copy of your divorce decree and settlement
agreement if you're divorced and you claim or are paying alimony and-or child support.
8. Three months of original bank statements and
a written explanation of any large deposits.
9. The purchase and sales contract. If you
find a house before you apply for a loan.
