How to Keep a Good Credit Score, According to the CFPB

Published by nora | Filed under Buyer / Seller Tips, Miscellaneous, Mortgage / Finance, Real Estate

A website to guide U.S. consumers has been launched by the U.S. Consumer Financial Protection Bureau, an agency recently created by the Obama administration as part of its financial reform program. One of the first guides on the website is about keeping a good credit score.

The key factors affecting credit scores are:

1.  Payment history. Late payments reduces scores.

2.  Balances.  Borrowers with higher ratings are those who don’t use a big portion of their available credit limits and who don’t use all their existing credit lines.

3.  Negative public records. Bankruptcies, liens and judgments have substantial negative impacts on scores.

4.  Length of credit history. Years of maintaining good credit standing are clear signs of trustworthiness and responsible management of personal finances.

5.  Mix of credit types. The types of existing loans, such as mortgage loans and auto loans, indicate what kinds of products are being paid by the consumer.

6.  New credit accounts. New loan account applications and new inquiries by merchants on one’s credit scores are indications of need for additional debts.

Here are tips from the CFPB on how to keep a good credit score:

1.  Don’t use up your credit line. Maxing out on credit limits is an indication of financial tightness and possible problems with repayment. Credit specialists advise borrowers to limit credit usage to about one-third of their limits. Avoid applying for new small loans just before or while applying for a mortgage loan, as mortgage lenders are required to check on your credit-related activities and verify your credit standing just before closing on your loan application.

2.  Pay all your bills and loans on time. One way not to miss payment due dates is to set up automatic payments through your bank’s Internet banking system. You can also set up payment alerts on Gmail’s calendar or set up budget accounts on free and secure personal finance management websites like Mint.com, Yoodle.com, Buxfer.com and Budgepulse.com.

3.  Track your credit reports and your credit score and take immediate action to correct reporting errors. Take advantage of the free annual credit reports offered every year by Equifax, Experian and TransUnion. You can obtain your free reports at annualcreditreport.com. There’s no other requirement to obtain these free reports, unlike enterprising sites promising free reports.

4.  Don’t pay third parties to repair your credit reports. According to the Federal Trade Commission, there are credit repair enterprises that prompt you to do illegal means to repair your credit reports, setting you up for more serious problems. FTC says that nobody can repair a negative record such as late payment if this record is accurate and true. If it is not accurate, you can repair it yourself by contacting the reporting agency and the creditor involved.

If credit is not a problem and you’re now ready to own a home, contact Tampa4U.com. Why should you use the Tampa4U.Com team?