Know Your Credit, Know Your Score .....
Why it's important
Did you know you are able to receive a free copy of your credit report every year? It's a great opportunity to access and review your credit report.
Visiting AnnualCreditReport.com is the place to go for requesting your free credit report each year. There you can request your credit report from all three credit bureaus, Experian, Equifax, and Trans Union, all in one place.
Your credit report will contain your personal information, credit account history, credit inquiries, and public records. The information is reported to the three credit bureaus, so it is important to be reviewing the information regularly for accuracy and completeness.
If you've been a victim of identity thefy you'll see it in your credit report, because they take out credit in your name and the don't pay the bill. You will not know about the charge because they usually give a fake address, so this missed payment becomes a late payment.
The information within your credit report is used to calculate your credit scores, late payments cause a lot of damage to your score, so if there is an issue it's important to review and fix it now!
Now that we've touched on the importance of reviewing your credit report, let's dive into your score and how to build and maintain good scores!
You will have 3 credit scores, one produced from each of the three credit bureaus. These scores can range from 350-850.
Your scores are affected by the following and by how much -
Payment history - 35%
Credit Usage- 30%
Age of Credit Accounts- 15%
New Credit Inquiries- 10%
Types of Credit You Use- 10%
So what does all of this mean?
Well, paying your bills on time and not maxing out your revolving debt, such as your credit cards, is important in maintaining your score at a high level.
As you can see, payment history is the most impactful portion of your credit score. It is very important to make all of your payments on time, or even early if possible. If you have an account with late or missed payments, get caught up on your past due amount and work on a plan for making future payments on time. This won't make the late payments go away sooner, but making this effort to correct your payment history will improve your score moving forward.
A good rule of thumb is to keep your credit utilization, the amount of your credit limit you are using, to 30% or less of the total credit limit. If you are unable to pay the balance in full each month, 30% is a good place to keep your balance while working on paying it down to 10% or less - the ideal percentage to improving your credit score.
The age of your credit accounts is how long you have had your credit accounts open. The older the average credit age the better. So, if you have an older credit account you are not using do not close them down!
Improving your score and maintaining a good score is a great goal. Not only is your credit score important in major purchases such as a home or car, but your insurance rates can be affected by your credit scores too.
Do you have questions about your credit report or score?
Reach out to us, we're happy to answer any questions you may have
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Grace Mortgage LLC NMLS ID 2271494 | 909-781-4001
Licensed by the Arizona Department of Financial Institutions, License #MB- 1030403
Ryan Mihld NMLS ID 1492562, also licensed by the California Dept Of Real Estate #01501609
Equal Housing Lender. Cost and fees may vary. Information is subject to change without notice. This is not an offer for extension of credit or a commitment to lend. All loans subject to credit approval and secured by real estate.
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