The Credit Scoring System Sucks!
Yep, I said it and I truly believe it. As a mortgage lender in Woodbridge, VA a great deal of my time is spent reviewing credit reports for hopeful first time homebuyers. The variation in scores between the three bureaus, the erroneous account information, and now the way people are penalized for high credit utilization is completely ridiculous....yes this is a rant!
So you ask what is credit utilization? Basically it is the amount of credit you have in use versus your credit limit on the account.
Since the "economic downturn" credit card companies lowered the credit limits on many consumers revolving accounts. What this means for you is although you pay your bills on time, your credit utilization ratio may now be above 50% which is a huge no-no in the confusing " FICO credit score algorithms". So unsuspecting clients looking to buy a home are shocked to find their scores have dropped significantly due to the "new credit rules". Here is a link to a guide The Consumer's Guide to Credit Reports and Credit Scores by the Federal Reserve .
The credit system sucks, but luckily your Woodbridge Mortgage Lender has ways to help you increase your credit score quickly. Call 703-497-3936 or email me for a free consultation. And don't let the system stop you from achieving your goal of homeownership!