October 25, 2012
If you are looking for a mortgage, the first thing that has to happen is that the Mortgage Broker or Bank will check your credit score. In a previous post, we looked at the banks pulling your credit every time you apply for a loan or mortgage. Using a Mortgage Broker avoids multiple pulls on your credit because they use the first pull to shop your file with all the Lenders. This time, we are looking at ways to keeping your credit score at its best so that when you need it, it is a help instead of a hindrance.
Keep your oldest trade line open, active and healthy
The credit bureau places the most importance on your oldest trade line, be that a credit card, a line of credit or a personal loan. When they assess your credit, this is the trade line that carries the most weight. Keeping your oldest trade line healthy is the first thing to remember when you pay your bills with your credit score in mind. But how do I keep it healthy?
Keep the balances on all your trade lines at or below 50%
The credit bureau will look at the balances of all your trade lines to make sure you are not overextending yourself. If your balances are all below 50%, this sends the message that you pay your debts and bills on time, and with little difficulty.
Use your trade lines
Even if you don’t need a credit card and it is at a zero balance, use the card, and pay it down the next month. This shows activity on your credit, which allows the credit bureau to include the great record of payment on ALL your trade lines when deciding on your credit score.