Credit cards, their payment history, balances, and credit limits are all part of a major factor that goes into determining your credit score.  We all know that your credit scores have everything to do with getting a mortgage and the type of terms you will qualify for.

One of the biggest factors in determining your credit scores is the total credit card balances over the total available limits.

Example:

You have 3 credit cards:

Card 1 has a balance of $500 and a limit of $2000

Card 2 has a balance of $500 and a limit of $2000

Card 3 has a balance of $500 and a limit of $2000

The total in balances of all cards is $1500 and the total available in limits of all cards is $6000.  Divide the total in balances over the total in limits.  In this example, it will give you 0.25 or 25%.  You always want to keep this percentage below 30%, because once it gets higher, it will start to affect your scores negatively.

Take this same example and say you wanted to cancel a credit card, because you didn’t want the temptation to use it anymore.  Well, if you took card 3, transferred the $500 balance to card 2 and cancelled the card, you would have a new percentage.  You still have a combine balance total of $1500, but now only 2 cards are open and a total limit of $4000.  1500 over 4000 is now 37%.  So, figure this percentage out before cancelling a card that you have, because it may be better off paying the card off and just not using it.

Other credit advice reading:

Credit Advice About Choosing A Credit Card

Understand The Simple Steps To Build Credit Scores

It’s important to our readers that you find all the mortgage advice and credit advice you can possibly find.  So, I have taken the time to list a few places that you should visit and soak up all the mortgage advice you can take.

Hope this helps!

Mortgage Advice Forums- I personally subscribe to this forum and help answer questions that people may have.  Bruce Brown, the creator, is very good at responding to everyone’s questions and concerns when looking for mortgage advice.

Zillow- Great place to get all kinds of advice, not just mortgage or credit advice.  Zillow has been around for awhile now and has been very popular with real estate in general.  If you haven’t heard of them yet, take the time to browse over the available advice and go from there.

Mortgageloan.com – I personally get many questions from the site, because of the amount of people that go to it for questions and advice.  Great place to soak in some more mortgage advice and mortgage news.

Lexington Law – Credit Report Repair - Credit advice for anyone that needs help with correcting things on their credit report.  What’s great about them is that you can call their 800 number and talk to someone that will tell you if they can help you or not, right from the start.

Ask Max – Very helpful information when it comes to credit advice.  There is also advice about paying off debt or debt consolidation.  I even browse this for myself from time to time.

Equifax - Not just a place to pull your credit report.  They have a learning center that is very educational for credit advice.  It also very important you look into identity theft protection, since this is the highest form of theft today.

I cannot stress enough the importance of your credit scores, whether you are thinking about buying a home or buying a new car.  I’ve talked about understanding the simple steps to correct your credit scores, but some people still don’t realize the importance of the credit scores.

Your credit scores will have a major impact on the type of interest you will pay on your mortgage.  I’ve gone over how important your credit scores are in “Credit scores are very important, but how important?”.

Your credit scores will also have a major impact on whether or not you will get approved for a credit card.  It’s important to take the time to check your credit report for errors and get things corrected if needed.

As for mortgages today, most lenders are requiring a minimum of a 620 middle credit score for approval.  I say the middle score, because in the mortgage world we pull credit on all three major credit bureaus.  Of the 3 different credit scores, the middle one will determine approval and interest rate.

There is one mortgage program called Rural Housing, which allows below a 620 middle credit score.  The lowest middle scores I’ve seen get approved with this program lately is a 600.  In order to get a 600 middle credit score approved, you will need compensating factors.  Examples of compensating factors would be liquid assets, a lower debt to income ratio, larger down payment, etc.

As our economy slowly gets better over the next few years, lending guidelines will continue to be tighter.  Again, please take the time to look at your own credit report at least once a year.  Take a look at freecreditreport.com and get access to your credit scores, along with credit protection.

If you need help with fixing your bad credit, Lexington Law – Credit Report Repair is a very good company.  A bunch of my own clients have said their service is great and they will tell you upfront if they can help you or not.

I believe we all make a new years resolution, whether we share it with others or not.  Personally, I made a resolution to work smarter and not harder, so I can spend more time with my family and do more things I personally enjoy.

We all have heard that lenders have tightened their guidelines when it comes to lending money.  This doesn’t just go for mortgage loans, but auto loans, credit cards, etc.  Right now, it’s more important than ever to understand your credit report and do what you can to correct what can be corrected.  The higher your credit scores, the better your chance of getting approved, along with paying the less interest on any money you need to borrow.

If you already made a new years resolution, that’s ok, because there is nothing wrong with making a second one…heck even a third!  Make working on your credit one of those resolutions.  Even though I specialize in working with bad credit, I always like to see a past customer come back to me with much better credit scores, so I can work on getting them the best interest rate and save them the most money!

Over the years of working in this business, I would recommend a couple of credit repair companies.  One of them doesn’t even charge you until they show you results, now that’s service!

Make it a great year and I wish you and your family the best!

Credit Repair Consultants, Inc. - This is the company that doesn’t charge, until they show you results!

Lexington Law – Credit Report Repair -  Another great company and I believe many are attorney’s.

Sky Blue Credit Repair -  This is another company worth taking the time to look into.