Credit Matters In Real Estate ... The Six Myths of Credit Scores
The most important factor in determining your mortgage interest rate is your credit score. Credit scores are what matters in real estate and are the basis for deciding if a loan is granted and on what terms. Here are some myths and realities about credit scores.
The Concept of The Credit Score Started Back in 1956 The concept of credit scores started back in 1956 with two men named Bill Fair and Earl Isaac. Fair, a mathematician, and Isaac, an engineer, founded the Fair Isaac Company; otherwise, known to us today, as the FICO score. This credit system has standardized the way the financial industry extends "credit".Myth #1: Closing accounts will increase your credit scores.Many people believe that closing accounts can help a borrower's chances of buying real estate. It is believed that having too many lines of credit is a bad thing when buying a home. But,there are two reasons why closing accounts can actually hurt a score. 
First think of the home you're buying, closing accounts will reduce your available credit. Since a credit score measures the difference between available and used credit, balances seem larger when available credit is reduced. Credit matters in real estate and in every area of your financial worth.
Second, credit scores take into account the length of time you have had the credit. Closing accounts when attempting to buy a home can make your credit and credit history appear shorter than it is ,thereby reducing your chances of buying a home and reducing your credit score. Credit matters in real estate and your life.
A Soft inquiry happens when you or anyone else simply wants to check out your credit score. Credit card companies do this when determining whether or not to send you a solicitation for a new credit card, or a refi-mortgage loan, etc. When a mortgage broker asks to check your credit score, it is treated as a soft inquiry, thus not having any impact on your score.
Myth #3: Married couples have merged credit scores Married couples have separate credit lines, and thus, separate credit scores.When applying for a mortgage, a couple can apply as a borrower and co-borrower,with separate credit information. You can not get a better average score by merging their individual credit scores.
Myth #4: Disputing information removes it from your credit reports If there is an error on your credit report, a dispute should be filed with the credit issuer. The issuer has 30 days to investigate and validate the dispute. After 30 days the dispute is either resolved or removed from the credit report. If the information is valid, it will not be removed and could hurt your chances of getting a loan for the home your desire. Many borrowers assume that if a dispute is made, the information will be removed "not so". Your cannot dispute valid information that is hurting a credit score and expect to have it removed. Myth #5: A higher salary means a higher credit score Your salary has no bearing on your credit score. A borrower with a high salary and a high debt load may have a lower credit score than someone with a lower salary who lives within his or her means in a house they can afford. Credit matters... Myth #6: Maxing out credit cards will improve credit scoresThis can and will have a negative impact on your score, it can prevent you from getting the real estate or home that you may desire. It is one of the worst things a borrow can do with his or her file. Maxing our cards increases the borrower's debt load while reducing the available borrowing room. This reduces the likelihood of timely repayment, making you more risky to a lender. Credit matters, except this it's true. 
What are the lessons to be learned here? To maximize your score, keep at least 2 credit cards accounts open and in good standing so that you'll be able to afford that new home, and keep your credit card balances at or below 30% of your available credit. It could make the difference in getting a new home or not being able to afford that home mortgage loan.
In the meantime, should you have a dispute you may contact any or all of Credit Reporting Agencies below: Trans Union, P. O. Box 97328, Jackson, MS 39388-7328 Telephone: (800) 888-4213, www.transunion.com Experian, P. O. Box 919, Allen TX 75013 Telephone: (888) 397-3742 , www.experian.com Equifax Options, P. O. Box 740123 Atlanta, GA 30374-0123 Telephone: (800) 685-1111, www.equifax.com While your waiting to hear from the credit agencies,you may want to subscribe to our real estate e-zine "Home Sweet Home" All about the home inside and out! We'll be sure to keep you on top of your credit scores and on top of your game! Credit matters get it together!
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