3 Things that Affect Your Credit Score

Theresa’s Soap Box | SMP Online

1)      Approaching or surpassing your credit limit on credit cards

  • For example you have a $5,000 limit on your credit, don’t go over 75% of that limit. Keep it under $4,000.  If you approach your limit, the bank will think that you are not able to manage your money as you have to use all the money that is available to you.
  • If you go over your credit limit, even by $1 or $2, it will make a huge impact on your credit score.

2)      Missing payments on credit cards or other bills

  • Even if you don’t have enough money to pay off the entire amount owed, always make the minimum payment on time or earlier.
  • Don’t wait until you’ve collected all the money to pay the entire amount, as you will have already been registered as delinquent on your credit file. Risk paying some interest instead of missing or being late on the payment, instead of lowering your credit score.

3)      Car loans or lines of credits balances

  • Car loans are pretty terrible, as the average car loan payment is $600 – $700 per month. And when you think about a mortgage payment for a $250,000 house, it is only around $1,000 a month.  What the banks and lenders do is take the $700 car loan payment into consideration that cannot go towards your mortgage anymore.  You have just lost $200,000 in buying power for your mortgage. Typically, a car loan is also set up for 5 years, so keep your payments low and get rid of those payments earlier if possible.

So, if you are about to get a mortgage, think about keeping your payments low, consolidating your debts, or try to get other payments out of the way before embarking on new mortgage debts.

If you have any questions, feel free to contact me, Theresa Shaw at 1-866-521-9557!


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