Credit Score Myths

[Pedro Gonzalez]

As I have mentioned before, as real estate investors we must be at all
times reviewing our credit scores and looking for ways to improve it.
Here I share with you some of the myths and misinformation spread in the
net.

1. The less credit I have the better for my credit score
2. If I lower my credit limit my credit score will increase
3. If I close my credit cards my credit score will increase
4. Keep a balance to have a good credit score
5. If I request my credit report it will hurt my score
6. I cannot get credit because I had a foreclosure or bankruptcy
7. If I pay my bills on time I will have a perfect score

In summary I will share with you how your credit score is affected:

10% Credit type (mortgage, installment, revolving, finance cards)
10% Inquiries
15% Age of the accounts
30% Outstanding balance
35% Payment history

So what do lenders look for:

1. Credit
2. Income - potential to fulfill the obligation
3. Cash in the bank - liquidity
4. Down payment

So what can you do to improve your credit score:

1. Keep credit card balances under 30% of their limits
2. Have at least 3 revolving credit lines
3. Verify the accuracy of your reported credit limits
4. Have at least 1 installment loan
5. Remove all errors from your credit report
6. Get a letter of deletion before paying a bill in collection
7. Create a restructuring plan

I hope this helps. I recommend that you seek professional help in the
implementation of a debt restructuring plan. Please remember that the
above suggestions are just general and specific situations may require
other measures.

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