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Credit Score Q and A Credit Score Q and A
Q. What is a "good" credit score?
A. It depends on what type of mortgage loan you are interested in. 680 is considered to be a good credit score, and is sufficient for almost all loan programs. However, be aware that score requirements can vary depending on the type of loan and the amount of the down payment. Specialized programs like "no income, no asset" or loans with minimal or no down payment require higher credit scores. For many conventional and government loan products, a score of 620 is acceptable. As your score increases, so do the loan programs available to you.

Q. What kinds of things can lower my credit score?
A. This can be tricky! The three major credit repositories calculate scores by analyzing various risk factors. Sometimes, an incident that you have forgotten about, or were never aware of in the first place can have a major impact on your score. A forgotten or disputed bill can show up, and you may not realize it until it turns up on your credit report. It does pay to monitor your credit score! Another factor that can drag down your credit score is the ratio of any credit card balances to the high credit amount shown for the account. The closer your balance is to the credit limit, the more your credit score will be affected. And while it may be tempting to skip a credit card payment one month and then pay off the entire balance the following month, or to make a "double" payment one month and then skip the following month's payment - DON'T!! Credit card companies expect at least a minimum payment every month, and will report a delinquent payment if they don't receive it. Of course, timely payment of any mortgage and installment loans is extremely important. A late payment, particularly in the last 12 months, can be very damaging to your score. Finally, a bankruptcy filing or foreclosure will have a negative impact on your credit score for many years. Many mortgage loan programs require that a bankruptcy be discharged for at least 2 years before they will consider making a new loan. The credit history and score must prove that the client has made a good faith effort to successfully reestablish good credit.

Q. Is it possible to improve my credit score?
A. Yes, but it is often a slow process. Start by contacting creditors who need to make corrections to your credit history. Investigate any items you are unfamiliar with, as they may not be yours. Paying off collection accounts and resolving tax liens will also help. Keep your credit card balances as far under the credit limit as possible, and remember to make all your payments on time, every month. Your score should start to show gradual improvement.

Tom Rosberg, owner and president of Mutual Mortgage, has been part of the Kansas City real estate industry since 1970.Heisa past president of the Johnson County Board of Realtors. Mutual Mortgage is proud of serving the greater Kansas City area for the past 18 years. Call Tom at 913-341-3800.


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