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Rob Schabatka & Pam Schabatka

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How to Keep Your Credit Scores High

Jonathan Burgueno

Pinnacle Mortgage

(928) 282-3200
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Review Your Free Credit Report

By law you are entitled to review your credit report once a year to determine its accuracy. Review your report prior to applying for a mortgage so there will be no surprises come application time. The best way to accomplish this is to contact one of the credit Bureaus or to find an online resource.

Note – Typically this service does not give you a score number without paying an extra fee. For this purpose, you do not need the score right now. For this purpose, use the report to clean up inaccuracies.

Pay Down Outstanding Balances

There isn’t a magic number that everyone agrees upon. Typically a rule of thumb is to keep balances below 50% of the maximum limit allowed on credit cards and other revolving debts. Obviously a zero balance is the best, but sometimes unattainable. Remember that it is important to still maintain enough funds to make the down payment for your purchase. Don’t over do it and use all of your funds to pay down balances.

Make All of Your Payments On Time

Try your best to make timely payments on all of your accounts. One of the most detrimental events that can hurt your credit is late payments. Lenders are currently very skeptical about repayment history. They want you to demonstrate your credit worthiness. The best way for them to determine this is to monitor your past accounts. If you are unable to pay any of your bills, remember that the first window of trouble occurs after 30 days delinquent. Subsequent targets are 60 days and 90 days late.

Don’t Make any Large Purchases

If you are ready to make a few large purchases, wait until after your mortgage has been approved and your Real Estate Transaction is closed. Opening any new accounts during the application process can be detrimental to your approval. Typically lenders like to see “seasoned” accounts on your credit report. A brand new vehicle, purchased recently, hasn’t had time to “season” or see demonstration of payback by you.

Don’t Move a lot of Money Around to Different Accounts

Current mortgage regulations are extremely tight. Lenders do not want to see a lot of transactions between accounts unless they can be explained. Even so, if you can avoid moving the money around during the preceding months and during the mortgage application process, your potential for approval will improve.

Don't Let Everyone Run Your Credit Report

One of the negative factors in your credit score is the number of inquiries made into your credit history. The thought is, the more people that look into your credit worthiness, the more likely you are shopping to make a large purchase. To combat this issue, the credit bureaus give a window to consumers that allow them to have all inquiries grouped together for the home buying process.

The current window is 15 days from the point of the first inquiry. If you are able to have potential lenders working with you review your credit report during this window, the negative impact on your credit scores will be marginalized. This may take some coordinating efforts, but typically allows plenty of time for your needs.

For any further explanation, contact your lender for their opinion and credit building resources. Good Luck and let's start your Sedona Property Search!