Mortgage News and Notes

Credit Score Tips from RMC

May 24th, 2018 7:10 AM by Steven Hofberg

Dear Friends,

This week, I will address those items that should be followed by everyone regardless of score. Keep in mind that credit score management is a marathon, not a sprint. Your actions will take one or more months to come to fruition; sometimes a year or more in difficult cases.


Here are four tips that everyone should follow regardless of your score:


1. Make Sure Your Credit Reports are Accurate


Most everyone has three credit reports, each one from the major credit bureaus – Experian, Equifax and Transunion. Some credit providers chose one of the three, but for mortgage credit we must have a “tri-merged” credit report, which means a combined report including information from all three bureaus. A recent study by the Federal Trade Commission found that 20% of consumers had at least one error on their report. Your credit score is based on the data in those three bureaus, so checking them for accuracy is very important. You can do that for free once a year at, the website run by the major bureaus under a mandate of the federal Fair Credit Reporting Act. Once you get the reports, check for errors in personal information (name, address, etc.), and review the list of credit accounts for accuracy. Disputes have to be filed with each bureau separately, and each individual dispute should be filed separately, meaning three disputes for each error.


2. Build a Strong Credit Age


For young people especially, having a short credit history will hinder your scores. A good average age for a credit history is five years or longer with at least three tradelines, or creditors. Someone with only a one year history will have significantly lower scores than someone with the same on-time payment record but over five years. So establish credit as soon as possible in your adult life (see the next section on getting and using a credit card).


3. Get and Use a Credit Card


Apply for and maintain at least two credit cards. Three would be better. Once you receive them, make at least one charge per month on each, and pay off the balance each month so you don’t incur interest charges. This will build your “Credit Age” as discussed above. But fair warning, if you make payments late on any card, your scores will drop substantially. Use your good credit wisely and don’t buy more than you can afford to pay off in a short period of time (ideally by the end of the month).


4. Monitor Your Credit Utilization Ratio


One of the most important factors affecting your score is your credit utilization ratio, which is the percentage of available credit that you are actually using. Try to maintain a 15% ratio, meaning that if you have a combined credit card limit of $20,000, your total credit card balances should be $3,000 or less, even if you pay off the entire balance at the end of the month. In any case, try never to exceed a 30% credit utilization ratio, or your scores will drop substantially. This is also the reason you should not close old credit accounts. Keep that available credit limit to lower your ratio, even if you rarely use the card.


Have a great week!


Steven H Hofberg

Operations Manager



Next week: More tips to improve your credit score.

Posted by Steven Hofberg on May 24th, 2018 7:10 AM


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