How to Get the Perfect Score

(updated 03/04/08)

Ninety-five percent of all loan packages are credit score driven. The following will help you get, and then maintain, a high credit score.

1. Having credit cards is okay! It improves your score to show you have the ability to handle credit. The trick is to have four lines of credit (mortgage, car loan, two credit cards). Each should be 24 months old (don’t’ keep signing up for new accounts), and have a credit limit over $1,000. And, your mother was right, pay those credit cards down to zero as quickly as possible!

2. A good rule is to keep your credit inquiries to a minimum, as many credit checks over a short period-of-time will lower your score. There are a lot of offers out there for “free” credit report checks, once a year is probably sufficient.

3. Avoid "NO PAYMENTS for 24 MONTHS!" offers. Sounds good doesn’t it, but these type of loans may hurt your credit score as they show a debt, but no ability to pay for at least 24 months. If you do use this type of credit make sure the loan is CLOSED when the final payment is made.

4. Always understand the terms and conditions of any loans and make your payments in full and on time. This is especially important with home loans.

5. Be careful of credit "counseling." Most lenders look at just like a bankruptcy, meaning a minimum of two years after counseling is complete before you can get a loan package with conforming rates.