Are you familiar with FICO Credit Scores?  Hardly anyone knows the breakdown for coming up with a FICO Score, but I have heard that about 35% is based on payment history, 30% is based on what is owed on accounts, 15% is for length of history on your accounts, and 20% goes to new credit inquiries, the types of credit you have, and other misc items.  For more information on this breakdown you can visit  But for our purposes, we want home buyers to increase their credit scores.  How can you do that?

First, you should know that over 50% of credit reports have problems on them.  So if you are going to purchase a house in the next 6 months you should check your credit report for mistakes.  It is the consumers job to get their credit report corrected, not the companies that mess them up.  It takes work to clean up a credit report.

You need to know that lenders are looking for a credit report with a score over 650.  One late payment on an account can lower your score by 50 points!

Don’t close those old accounts!  Even if you are not using them, don’t close them.  You need those high credit limits to contribute to the amount you are allowed to borrow.  Don’t apply for loans, mortgages, or open new credit card accounts.

Next, paying old debts can actually lower your credit score.  Check with your lender to see if you should pay off old debts.

Never lower your credit limits on a credit card!  The higher, the better your ratios will be.

If you are thinking about purchasing a home, call RREA for a free evaluation.  If you know you have credit problems, we can refer you to a credit repair company that can get you ready to purchase.  If you are choosing your own credit repair company, look for the National Association of Credit Services Organization’s emblem.



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