NJ First-Time Home Buyers

head_left_image

Credit Scoring - History (4 of 6)

Your credit history accounts for 15% of your total credit score.  History does not refer to payment history.  History is the evaluation of the timeframe that your accounts have been open and active, as in how many months or years.

Longer Credit History = Higher Credit Score

Long Credit History Paid As Agreed=Positive Impact To Credit Score

TIPStips

 

Why you should never close a credit account ... 

Never close a credit account, especially if it has a long payment history.  This can negatively impact your credit score because the history aspect of your credit profile will be made shorter. 

Authorized User Accounts

A fairly well known "trick" to raise a credit score is to become an authorized user on an existing account.  Some laugh at me when I say this in my credit seminars, because their first thought is, "Why would I give someone with bad credit or no credit my credit card?"  Well the fact is you don't give them your credit card.  You add them as an authorized user, and when the card comes in the mail, it comes to the account holder.  Adding someone as an authorized user benefits them a few ways;

  1. It gives the authorized user "instant history" as spoken about above
  2. It gives the authorized user higher credit limits on their credit profile (see Credit Scoring - Balances)
  3. It gives them great payment history.

The above three benefits are assuming the authorized user is added to an account with a long history, a high credit limit, and the account is paid on time.  Adding someone to a "bad" account wouldn't make sense.

Be sure to catch all the credit scoring articles in this series.  Keep in mind, credit reports can be complex and confusing.  Please contact me if you have specific questions. While I applaud the effort people make to maximize their credit score, we must be certain we are taking the right steps and don't end up creating more harm than good.  ~ Steve Kappre 

Credit Scoring – What Makes Up My Credit Score? (1 of 6)

Credit Scoring – Payment History (2 of 6)

Credit Scoring – Balances (3 of 6)

Credit Scoring – History (4 of 6)

 

Comment balloon 5 commentsStephen Kappre • October 25 2008 03:54PM

Comments

Steve - excellent post and thanks for the information. I have clients who ask me these kind of questions. Great post!

Posted by Sharon Paxson, Newport Beach Real Estate (Compass) almost 10 years ago

Sharon - I edited these credit blogs so that you can repost if need be - or just direct your clients here.  :-) 

Posted by Stephen Kappre, Helping You Home (KW Hometown) almost 10 years ago

Steve - I appreciate these credit score updates/tips.  We are in a first time home buyer market so converstations about credit scores and qualifications are numerous.

Posted by The Somers Team, Real People. Real Dreams. Real Estate. (The Somers Team at RE/MAX Access) almost 10 years ago

Thanks for the info and the tricks, this one is going to come in handy for me on a file I am working on now.

 

Posted by Marie Ogle, Contract Mortgage Processor (Mortgage Processing Solutions) over 9 years ago

Marie - I'm glad you are reading. Most processors and even underwriters just say "ok" to the facts but don't know them and often don't give advice that works in the clients' benefit. I've seen underwriters give bad credit score advice, only to have the client come back months later after doing "what the underwriter said" to be in a worse position and still not able to buy a home. 

Posted by Stephen Kappre, Helping You Home (KW Hometown) over 9 years ago

This blog does not allow anonymous comments