Do you know what your credit score really is?

Credit card fraud and identity theft are hot topics in the news these days—and with good reason. In 2008, nearly 10 million people were affected by identity theft. With more people shopping online, using debit cards freely, and even utilizing smartphones to do financial business, it’s no wonder that, for many, their credit scores are at risk as well.

Despite the fact that credit card fraud and identity theft are adding to the headaches of potential homebuyers looking to secure a loan, your credit score is still affected by the fundamentals that have always either made your scores sore or sink.

• Late payments to credit cards is the number one killer of a credit score. Just one late payment alone could drop your credit score by more than 100 points.

• Carrying a big balance on a credit card doesn’t help either.

• One surprising credit score killer is actually closing a line of credit. It may make sense to close one account if you never use it and have another credit card that is active. But it can change your debt to utilization ratio, ultimately affecting your score.

• The same holds true for opening a line of credit because now you are immediately at a higher risk.

• Defaulting on a loan is the biggie, which could bring your credit score down by as much as 200 points or more.

The bottom line is you must be a vigilant advocate for your credit score as you make various day-to-day financial transactions. Having an understanding of what increase your score versus decreasing it will help you to be better prepared when you’re ready to apply for a loan for your new home.

Stylecraft Builders

Stylecraft Builders – Central Texas’ New Home Builder

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