by: Gaye Jones, AnnieMac Home Mortgage

Keeping your credit scores as high as possible will benefit you in many aspects. Credit scores affect many things in your financial portfolio. They can determine whether you are able to acquire a mortgage, credit card, car loan and can even affect your insurance rates. So how do you utilize credit yet obtain the highest score possible? That’s the difficult part. Sometimes it just takes time.

My experience has seen that those with the highest scores use credit, but keep their balances low on revolving accounts. They also rarely have any open collections. Mortgage companies like to see a customer’s credit profile that has at least 3 credit lines of either installment (fixed payments) or revolving credit. Installment loans typically score you higher than revolving credit. A long history of credit accounts will also increase your scoring.

There are many companies that advertise they will “fix” your credit and typically they dispute any derogatory credit being reported. You can’t really fix your credit unless there is truly something that is being reported incorrectly. When a credit line is disputed your score is artificially inflated while the dispute is being resolved. The problem with disputed credit lines is that while the credit line is in dispute, you are not eligible to obtain a mortgage. Once the dispute is resolved, if it is not in your favor, then your score will drop.

The best advice I can give is to make sure you are not more than 30 days late on any accounts, use your revolving accounts wisely, always either pay off the charges each month or pay more than the minimum payment due on revolving accounts, and don’t let accounts go into collection status. This should give you the best score possible based on your credit history.

If you are planning on a home purchase I would recommend that you get with a mortgage professional at least 3 months prior to when you would like to purchase a home so your credit can be analyzed and you have time to correct anything that is bringing your score down or is incorrectly reporting.