A recent report showed that the National Association of Realtors’ Housing Affordability Index rose in April to the second highest monthly reading on record. That means homes in Loudoun County and Fredrick County are more affordable now than at almost any other time. What’s more, the limited-time $8,000 first-time buyer tax credit makes purchasing a home an even better deal.

A credit score is a number that is calculated based on your credit history to aid lenders in determining your credit-worthiness. This number is intended to help a lender determine the level of risk they may be taking in lending to you. The system gives you points based on information in your credit report.

What Can I Do to Improve My Score?

* To get the best credit score, you need a mix of different credit types including revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages).

* Reduce your balances on credit cards to 75% or less of your available credit. Don’t charge more than you can pay off in a month. You don’t have to pay interest on a credit card to get a good credit score, and it’s a smart financial habit to pay off your credit cards in full each month.

* Pay your bills on time.

* If you don’t already have established credit or you need to rebuild, get a secured credit card. Secured credit cards report your credit payment history information to the credit bureaus just like a regular credit card. They are “secured” by your money. Check with your personal banker.

Avoiding over-inquiries

There are two types of credit inquiries that can be made to your credit report: hard inquiries and soft inquiries.

A hard inquiry occurs when you seek to obtain credit. This happens when you apply for a loan or credit card, for example. Each time you fill out a credit card application at a department store, the inquiry counts as a hard inquiry. Only you can authorize a creditor to perform a hard inquiry on your credit report.

A prospective lender or other creditor will likely be concerned with an applicant whose credit report shows a high volume of hard inquiries. That’s because it suggests a carefree attitude in applying for credit or an effort to borrow excessively.

Borrowing too much — a situation called over-leveraging — is a potential red flag for creditors. It signals you may face more difficulty in repaying your debts in cash-strapped times than a person who judiciously applies for credit.

If you’re going to ping your credit report with frequent hard inquiries, it may be best to concentrate them around the time you apply for a home or auto loan. If you’re thinking about applying for a mortgage loan, please contact me for advice and information before starting.

A soft inquiry is one where the inquiry is not tallied on your credit report. A soft inquiry does not constitute a bona fide request for credit. For example, a soft inquiry occurs when you obtain a copy of your report.

Get a copy of your credit report. If you are being turned down for credit you need to be sure the reason is valid. Many credit reports have errors. Dispute any inaccuracies you find.

Get a credit report from all three bureaus. Each one may have different information and maybe errors in your file. You can’t know which bureau’s data will be used to evaluate your credit application, so check them all.

Here is the contact info for the three major credit bureaus:
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Equifax (CBI) PO Box 740249
Atlanta, GA 30374
(800) 685-1111
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Experian (TRW) (888) 397-3742
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Trans-Union 555 W. Adams
Chicago, IL 60661
(800) 916-8800
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