By John Johnson, loan officer with Chase Home Mortgage

Does anyone remember taking a class in school on “Credit Scores and How They Can Affect Your Life?” I sure don’t, but I wish I did. Most of us have learned through the school of hard knocks. With credit card companies pounding us to obtain more credit every day and soliciting everyone in the household, it’s not wonder we are at an all-time high of bankruptcies. This is not made up: our dog Sophie somehow received a credit card offer in the mail, and she was even pre-approved. Good job, Sophie.

         When anyone runs your credit for any reason, make sure you ask what your score is and if you can get a copy for your records. Scoring generally ranges from the low 400’s to the low 800s, with the 400 range being the worst and the 800 range being the best. Within the scores are basic tiers high enough for a mortgage: under 600, 620, 660, 700, 720 and 740-plus. Qualifying credit scores vary from lender to lender and the different programs they offer.

            Anything under 570 will make it a bit of a challenge to obtain an “A Paper” mortgage, which means the mortgage has the best rate available on a program offered by that lender. My advice to borrowers is to strive for a minimum score to 620, or even 660, to increase mortgage options. The higher your credit rating, the more buying power you have and the less documentation you’ll need to provide. For instance, “No Doc” loans are based on credit score only. Lenders figure that if you can manage our credit rating then you will not overextend yourself with too high of a mortgage payment. Also, a higher credit score sometimes means a better interest rate.

Tips for maintaining good credit:

1. Obtain a copy of your credit report from at least three credit bureaus: Equifax, Experian, and TransUnion, You’re allowed one free report per year.
2. Use no more than 50% of the available limit on credit cards.
3. Close all credit cards and lines of credit not being used, leaving approximately three lines of credit open (credit cards, car loans, mortgage, etc.). It’s better to have an account for a longer period of time rather than switching to new accounts, such as transferring balances from one account to another to get a lower first initial interest rate and then switching it again to yet another to again get an even lower initial rate.
4. Pay NOTHING late.
5. To lower your risk of Internet identity theft, use a credit card with a low ($500 or less) available balance for internet purchases and use a different one with a higher balance for everyday use.

 Be knowledgeable of your credit and always strive to make financial decisions and that will improve your financial situation and credit rating.