COMMON MYTHS of CREDIT and FREE WAYS TO IMPROVE YOUR SCORE

I have been in the business for 25 years and learned to read credit reports way before there were credit scores. We were taught to carefully assess the credit risk of a buyer based on their pattern of payments, number of late accounts, how recent the delinquencies, type of debt, etc. This training went by the wayside when credit scores were derived.

Today, a loan officer looks at the score to determine the ability for a borrower to obtain a mortgage. With this simplistic approach it has made it much easier to determine a buyers ability to get a loan, but it doesn't help a loan officer to properly council someone with less than stellar credit on how to boost their credit score. I have the experience and am better adept at assessing a person's credit report and showing them ways to improve their credit scores.

There are a few myths about credit which are commonly known yet misunderstood. One of the most common myths which I know not to be true is that most people believe that you must open a charge card, charge it up,pay it off, and close it to establish credit. While it is true you must open an account to establish credit, you don't have to use it at all! When you look at a charge card on a credit report it will show the payment patterns for the past 24 months. If the account has never been used it will still show excellent payment patterns as if the card has been actively used. This is an excellent way to build your credit without ever having to use it. You can open a Mastercard or Visa and cut up the card. This will boost your credit score immensely.

Another common myth is when people tell me they paid their late credit card off in full and closed the account. Unfortunately, this doesn't help your payment history. It is true that by paying off the account will bring it current, but the last few months payment history on the account will display the last few late payments for a long time. It becomes an old account and will no longer rate. It is much more effective to pay the account current and continue to make timely payments for at least 24 months to clean up the recent history on the account.

"I've heard that a bank can turn you down if you have too many unused credit cards...they feel that you have the potential to charge them up?"
This is very untrue. I council people how to improve their credit scores by lowering their credit card balances. If you have revolving charge balances below 50% of the limits you will increase your credit score. If you don't have the money to pay down the balances, perhaps you can have the creditor increase your credit limit to obtain the same objective. For instance, if you have a $500 credit limit and a current balance of
$475, by raising the limit to $1,000 you will be able to artificially be able to reach the same goal. Don't close the unused accounts. They are helping you amass a higher credit score.

For a free assessment and credit counselling please contact me at

Andy Williams
President
Abacus Regional Mortgage
484 695 5972
andrew.williams@abacusmort.com