Your portfolio of credit MATTERS!
Although we, North Shore Advisory, Inc., know a great deal about how the Fico Score system works and what affects it there is much that is kept secret. We have come across credit reports, once in a very long while, where the consumer only has 2-3 lines of credit and the score has been as high as a 800. Usually having two lines of credit would deliver a low score. How could this be it is perplexing? Instead of focusing on what we don’t understand we have decided to figure out what, for the most part, insures great scores.
Having a wide range of credit in your credit portfolio is the way to build an excellent credit score. We know that the scoring system wants to see who we are as consumers by viewing our payment patterns. The best way for them to see us is by reviewing our ability to manage many types of credit. Revolving, Installment, Mortgages, these types of credit give the scoring system the ability to predict our risk level.
Revolving credit (credit cards, lines of credit) impacts the score the most because it is the only credit that we have total control over. We can charge as much as our limit allows and pay as little as the minimum suggests. Therefore when balances are high on this type of credit the score plummets downward. Because installment credit (auto loans & leases, student loans) is always the same amount of payment monthly the balance ratio, although it hurts when high, does not impact the score as much.
Mortgages, lines of credit, overdraft on a checking account, different types of credit cards, show the score your vast ability to manage credit. But it is important to know that when you are building your portfolio of credit by opening new accounts the score will drop until they become seasoned (over a year or two old).
SO PLEASE DO NOT RUN OUT AND OPEN CREDIT IF YOU ARE APPLYING FOR A LOAN IN THE NEXT YEAR. This is only to be done when you will not need to open credit for a year or so. No matter how few or many accounts you have if your balances are high your score will drop dramatically.
Copyright ©2009 North Shore Advisory Inc.
About Tracy Becker
Visit Our Main Website For Credit Repair Help
For over two decades, I have owned and operated a Credit Education and
Restoration Company. We can increase Fico Scores by hundreds of points and
our fee is billed based on success. I enjoy Public Speaking across the
Country where I work with all kinds of Professionals, helping them find
solutions to Credit Problems. I have Expertise in both personal and
business credit. I've worked with thousands of people leading them into
better credit and ultimately, financial health and more opportunity. I
educate Bankers, Realtor's, CPA's, and Finance Experts on Credit from A-Z.
I'm also publishing my second book "Credit Score Power". Lastly, I've been
interviewed on national Television and Radio as a Credit Expert. Feel free
to contact me if you have any credit questions or clients who wish to
increase their credit score.
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