What is YOUR Credit Score?

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Real Estate

Judith Sutton ABR CRS IDS PMN ASP IAHSP SRES GREEN

Judy@JudithSutton.com   908 803-0472

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WHAT IS YOUR CREDIT SCORE?

Is a credit score of 800 just a myth?

 

Absolutely not. Nor is a score of 850, which is the highest possible FICO score. *

 

In order to have a high FICO score, a consumer must do some very difficult things:

 

  • Pay their bills on time consistently
  • Have multiple trade lines (open accounts) in good standing
  • Have low credit card balances relative to their credit limits
  • A consumer who has a mortgage

 

A bonus but not necessary: have different types of credit, such as credit cards, mortgage and installment loans.

A consumer can get a score in the mid-700 range without owing a single penny. They can do this by having three or four active credit cards that they use regularly and pay off in full each month. Carrying a balance will not help the score and will cost money.

 

A consumer who has a mortgage in addition to active credit cards can easily get to 800 and above. One component of the FICO score is the average age of accounts—older is better. You may have four active cards now with an average age of, say, three years, plus a mortgage that you’ve had for a year or so. I’d estimate that this will generate a score of around 750–780. If nothing changes, the score should rise over 800 once the accounts are about five years old.

 

In addition to having active credit cards, requesting regular credit line increases is another no-cost score enhancer.

 

Fretting too much about your credit score is really unnecessary. For instance: one client, an older man, was incensed that his score was 840. He knew that 850 was perfect, and demanded to know why his score wasn’t 850. He was especially irate (not really) because his wife of 65 years had a score of 850—and she would never let him forget it!

 

Once you have a score of 740, you’ll get the best rate for a conventional mortgage. As you approach 800, companies will send you unsolicited offers for financing of different types. A score of 850 gets you one thing: bragging rights.

* Note: The traditional FICO scores used by mortgage lenders usually range between 300 and 850*

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Judy@JudithSutton.com 

COLDWELL BANKER...GUIDING PEOPLE HOME SINCE 1906 

 908 803-0472
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