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How to Keep Your Credit Score Flying High

Feb 27, 2008
What is the one thing that can keep you from buying your dream home? No, it isn't your mother-in-law's guilt trip - well, it might be - but what I'm really referring to is your credit rating. Here in San Diego, credit often makes or breaks a home loan. Here are a few financial tips to help a buyer keep his or her credit score high.

What's the Score?

Before you finance any major purchase, whether it be a car, boat, home or any other big ticket item, you need to check your credit score. It will let you know what kind of financing rate you should expect. In fact, if your credit rating is particularly outstanding, you can command the best rates available. It's also a good idea to check your credit score regularly to ensure that you are safe from identity fraud or any mistakes on your credit history. Go to Experian, TransUnion or Equifax - the three major credit bureaus - and look for a free trial offer. This will let you get a free credit report to find out your score. Just be sure to cancel your free trial offer before it expires, unless you want the annual membership is applied to your credit card.

What's it Mean?

So, you've found out the three little numbers that will make or break your finances. But what do they mean? FICO credit scores run between 300 and 850, with the average credit score coming in at 639. 300 is abysmally bad and 850 is immaculate and amazing. Most lenders will not let you finance a home without 20 percent down if your credit score is below 620.

How To Get Your Number Up?

Improving your credit score isn't as complicated as it sounds. Here are a few simple suggestions to bolster your credit rating to help you buy the home of your dreams.

Want to hear a surprising way to manage your finances? Never pay off your revolving debt entirely, and don't close down your credit cards! Who would have thought that having a bunch of paid off credit cards doesn't help your credit score? It's true, though. Your credit score reflects your ability to manage debt. Keep your cards open and make your payments on time, without concentrating on being totally debt-free.

Next, do not apply for any additional credit. Every time you give your social security number to apply for credit, you damage your credit rating by a small amount, and those inquiries can add up! Limit yourself to three to five credit cards, and don't apply for any special gimmicks. Free blankets and teddy bears with your new account won't make up for the blemish on your credit rating.

Third, avoid bankruptcy if at all possible. It will stay on your credit rating for at least ten years, complicating every purchase that involves credit in your life. Simply put, it messes things up quite badly.

The most important thing about credit is knowing where you stand and how to improve. Find out your score and never stop improving it. It will give you a lifetime of stress-free buying power.
About the Author
Kari Shea, of Shea Real Estate & Investment Group, is an accomplished business professional and community leader in the San Diego, California area. With more than 45 years of collective sales, marketing and consulting experience; the Group are master negotiators in the marketing and selling of real properties. Learn more about their services at: www.shea-realestate.com.
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