You’ve no doubt heard or seen advertisements from various financial services that all claim to be the quickest and easiest way to obtain a credit report, all centered around one simple word…FREE!!!!
What these ads often fail to do is educate consumers as to how their scores are affected - positively and negatively - by their everyday actions. At Midwest Lending, we look to educate our consumers while guiding them with our financial expertise.
Take a look below at HOW your credit score is made up – you just may save yourself a lot of time and trouble.
A simple concept - pay your bills on time. Credit cards, car loans, medical bills - a 30 day or later payment on any of them can have a serious effect on your overall score.
You may have heard the term ‘credit utilization ratio’. This is a fancy way of saying, “Don’t use all of the credit available to you." Rather than maxing out your credit cards, focus on spending somewhere around 30% of your limit. For example, if you have a $2,000 credit limit on your Visa card, maintaining a balance of over $600 could hurt your credit rating.
Generally, the longer you’ve been using the various forms of credit, the better. Having NO credit history can make it just as difficult to get a mortgage as having BAD credit history.
It’s best to mix up the types of open accounts that you have. A nice mixture of revolving debt (for example, credit cards) vs. installment loans (mortgages, student loan payments) will do the trick.
Applying for several new credit cards and/or new loans in a short period of time makes you look desperate for credit. Find a natural balance, as credit bureaus take into account your overall financial behavior. Keep in mind however, that multiple inquiries to the same service (i.e. a mortgage) is understood, as a responsible borrower is expected to shop.