Credit Tip #5: Auto Loan and Home PurchaseHaving a healthy mix of credit includes an auto loan. But having a fleet of cars on your credit won't necessarily help. Just one is needed to complete a mix of credit. Your score will drop after the purchase (or lease) of an automobile, then pick up each month with successive on time payments. Because of this initial drop, don't purchase or lease a car 90 days before looking for a home loan or refinancing your house.Credit Tip #6: Mortgage and Auto Loans Grouped TogetherDepending on the scoring formula, all autos and mortgage inquiries made within a 14 or 45 day period are grouped together as one for scoring purposes. Many credit scoring formulas will allow for the fact that you might want to shop around for an auto or a mortgage loan and that each person or company you work with might want to pull your credit. So the way that it's now set up is if you have 8, 10, 12 or more mortgage inquiries in the past 2 weeks as well as the same or more auto inquiries, the mortgage inquiries get grouped together as will the auto inquiries. So for scoring purposes, the mortgage inquiries will count as 1 and the auto inquiries will also count as 1 against you. Therefore, a total of 2 inquiries will count against you for scoring purposes.Also the first inquiry in the group for each auto and mortgage won't count against your score for 30 days after it's pulled. So don't worry about taking that slight drop on your credit score for the next month, because you have a 30 day buffer period.Credit Tip #7: HELOCs and Credit ScoreYou would not want to max out your credit card, so do not max out your HELOC either because it could cause your FICO score to severely drop.Fair Isaac claims that when the dollar amount exceeds a certain limit, the credit scoring formula is supposed to treat the HELOC as a mortgage account and not a revolving credit account (i.e.: credit card). But quite often, HELOCs are treated as revolving credit and credit scores can suffer immensely.For example, you want to take out a $50,000 HELOC and use the $50,000. The credit scoring formula often sees this as if you have maxed out a $50,000 credit card and your score will suffer.Another option is take out more than what you need you, if have the available equity in your home. If you use the same $50,000 on a $250,000 HELOC, you only pay interest on the $50,000 that you borrowed and the scoring software will not hammer your score like in the above example. It looks at this HELOC like a $250,000 credit card that only has a 20% debt ratio, a considerable difference from 100% in the previous example. So if you decide to use a HELOC, make sure you use it in a way that best affects your FICO score.To learn more about how you can help increase your credit score, go to Financial Solution Services' website at FSSb2b.com where you can find more great information on credit improvement. And, you are cordially invited to sign up for a FREE webinar by visiting UpcomingWebinars.
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