Increasing your credit score

Here's some advice that was just given to me, and I wanted to pass it

on to all of you.



My husband and I are looking to lower our mortgage interest rate ...

not refinance, just see if we can drop the interest rate. We

refinanced almost three years ago, mostly to get out of a mortgage

that had a variable interest rate. Our credit was not the greatest, so

we got a fixed rate of 7.65%. There was a three-year prepayment

penalty which will now be up in September. Meanwhile we worked on

paying off some of the debt (and did a pretty good job) hoping to be

able to drop that rate once the prepayment penalty time was up.



So the guy we've worked with (this will be the third time now, and I

really consider him a friend at this point even though he's several

hundred miles away!) called to say he's going to see how things look

now and where we stand. Our credit score has gone from fair/poor to

good, but not great. He said a big thing is we have a couple cards

that have some charges on them (hubby has been working on several home

projects). The problem he said is that three of the cards are close

to the credit limit. A big factor that the lenders look at these days

to determine your credit score is the use of the card. It will not

kill you to have some charges on it, but it needs to be less than 50%

of the total credit limit. So if you have a card with a $2000 limit,

they want to see a balance of no more than maybe $950. And it's okay

to have more than one card with a balance (though the fewer the better

of course), but again, they can't have a balance of more than 50% the

credit limit. So he had even said you can "play" a little -- if you

cannot pay it down or off, you can transfer some of the balance to

another card and spread it out a little, as long as none of the cards

go over 50%. Actually, somewhere else I heard the magic number is 41%

so I'm actually going for that one to play it safe.



Anyway, I will let you know how it all turns out for us, but meanwhile

I have gotten all remaining balances down to 40% or less. From what

he said, this will help us get a better credit score and thus a better

interest rate. So that is something to keep in mind ... if you're

going for a loan or refinancing or whatever, and you want to get the

best credit score you can, make sure you have no more that a 40%

balance on any cards you have. If need be, move it around a little to

make it so.



Jill