Low Credit Scores

October 1st, 2009

A low credit score can be caused by several factors. For details on ‘bad credit’, go to my web site (www.GetLoans.com) and hit the ‘Tools’ button and then click on the ‘Loan Programs’ button. See the data under “Credit Score Information” to see in great detail how credit scores are determined. And see the data under “Credit Repair” to see if it is possible to fix your poor credit record.

The way they rate your credit used to be as simple as ‘have you made any late payments or not’. Now they go much deeper and look at things such as:

Length of credit history

Number of revolving accounts versus installment accounts

Insufficient length of credit history

Proportion of revolving balances to revolving credit limits is too high

Too many inquiries in the last 12 months

Too many accounts recently opened

Balances on accounts too high

Accounts not paid as agreed

Number of accounts delinquent is high

Past due or collected account

Too many accounts with balances

Too many accounts

This is just a very short list of all the different things that are now looked at. If you have a low credit score you cannot fix your credit overnight. It could take as little as a few months or quarters to get your score up to a better level that allows you to cross the minimum credit score limits, or to get better interest rates. But if your credit score is in really bad shape it could take a year, or multiple years, to repair your credit and substantially raise your credit score. Banks want to see that you have your act together and can maintain your credit score for the long term, not just for a few weeks or months, which is just long enough to apply for a loan application and get a mortgage. They want to see you have raised your credit score, and can maintain it there, for the long haul.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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