Improving your credit score / the three reporting companies and how they work:

When looking into a San Diego Home Refinance, San Diego Home Purchase Loan, or any financing for that matter, your credit scores will be crucial in determining whether or not you qualify and the interest rate you will be charged. There are three major credit bureaus used by lenders to determine your interest rate and eligibility for a San Diego Home Mortgage:

1. Equifax
2. Transunion
3. Experian

The first step to improving your credit score is to be aware of what items are reporting on your credit report and your current credit rating. There are many factors that contribute to your credit score, here are some important criteria you should be aware of:

1) Proportion of balance to credit limit- the average San Diegan who makes their payments on time every month may not understand why there credit scores are not ideal. All three bureaus ideally look for all of your open revolving accounts (credit cards) to have a balance of no more than 50% of your high credit limit. If you have a credit card with a limit of $1000, $500 would be an ideal balance.

2) Number of established accounts- To qualify for a San Diego Home Refinance or San Diego Home Purchase Loan, lenders will look at this criteria as well. Ideally, the credit bureaus would like to see accounts open and in good standing for at least 36mos, however the longer the period of time you have an account current and in good standing the better it will reflect on your credit score. If you have opened a number of accounts (new credit cards, dept. store credit cards) that have only been open for a short amount of time, that may negatively effect your credit score. All three bureaus like to see a minimum of 3 established (24-36 mos.) accounts with good payment history and balance proportions.

3) Number of Inquiries on Your Credit Report- For the San Diego Homeowner shopping for a San Diego Refinance this is especially important. Although it is good to shop around to see who will offer you the best interest rate or San Diego Mortgage program, having too many banks pull your credit report will actually bring your credit score down. The best way to avoid this is by having one San Diego Home Mortgage Company pull your credit report and give you a copy. This way you can present that copy to other banks and provide the information they need to qualify you without having another inquiry which may lower your credit score.

To find out more about how to improve your credit score, contact Equifax, Transunion, and Experian directly.