Credit Scores

Gustan Cho Associates

Can Your Credit Scores Be Improved?

Credit scores can definitely be improved in a short period of time.  Credit scores can fluctuate every month and there are very quick fixes in improving your credit scores such as paying down your credit cards to 10% of your credit limit, by adding new credit such as secured credit cards, and by being an authorized user on a family member and/or close friend’s credit cards.  Having a good credit score is not just a must have in qualifying for a mortgage but will definitely save you money on insurance premiums and can improve your chances of getting a new job or promotion.  More and more employers are doing credit checks as part of their employment process and those with derogatory credit or low credit scores may not meet the employer’s hiring requirement.  Credit scores are often viewed by employers who consider candidates for job promotions.

Credit Scores And Mortgage Rates

Credit score ranges from a low to 300 FICO to a high of 850 FICO.  To get the best possible credit scores available for a mortgage loan applicant, they would need a credit score of at least 740 FICO.  Many Jumbo Mortgage lenders have minimum credit score requirements of 700 FICO, however, to qualify for the best jumbo mortgage rates, the applicant needs a 740 FICO credit scores.

FICO Credit Scores

A consumer’s FICO credit score is made up of the following:

  • Payment History in credit report makes up 35% of the consumer’s overall FICO
  • Total Amounts Owed by the consumer makes up 30% of the overall FICO credit score
  • Length of Credit History of the consumer makes up 15% of their overall FICO
  • New Credit from the consumer makes up 10% of the consumer’s  FICO credit scores
  • Type of Credit the consumer uses makes up 10% of the consumer’s total FICO credit scores

Don’t Pay Off Old Collection Accounts

If you have older collection accounts, just leave them alone.  Any collection accounts with balances that are two years old or older hardly have impact on credit scores.  If you pay an older collection agency a partial payment or payment, this will re-activate the old collection account as if it were a new collection account and will trigger a fresh derogatory negative item and will drop your credit scores.  You can qualify for a mortgage with open and unpaid collection accounts.  If you need to pay off an older collection account, do a pay for delete where you negotiate with the collection agency that they will have your derogatory item removed in lieu of a negotiated payment.

Judgments Need To Be Removed Or Settled

You cannot have an unsatisfied judgment on your credit report and get qualified for a mortgage unless the judgment have been settled by an agreed settlement or a written signed payment agreement that has been in effect for at least three months.

Judgments is probably the worst derogatory item you can possibly have on your credit report.  The only way you can get rid of a judgment is by paying off the judgment, settling with the judgment creditor, or making a written payment agreement with the judgment creditor.

Related> Mortgage with under 580 FICO credit scores

Related> Minimum credit scores required to qualify for mortgage in California

Related> There are 5 factors that impact credit scores


The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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