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Mortgage Credit vs Bank Card Credit

So many times borrowers say the know their credit score which was provided by their bank.  This is not the same credit score used in the mortgage industry.  Banks use a different algorithm used for short term consumer purchases i.e. credit cards, auto loans,  etc.  Automated reporting systems often do not update with changes to original contract.  Paying collections does not help your score.  Collections accounts can legally stay on your report for 7 years after posted, even if they are paid and settled.  Paying collections may actually reset the date on the account, which can cause you to lose points that you already got back from the account aging.  Keep your credit card balance at or below 30%.  This doesn’t mean maxing out cards and paying down the balance, the algorithm looks at the spending within a billing cycle. Only use 30% or less of an accounts limit within each billing cycle. Inquiries do not have much impact on your credit.  A lot of people think it can really hurt them if they have their credit run, but the average impact on a persons score is 2-3 points. If you are looking for a mortgage you, actually can pull multiple times within a 15 day “shopping window” with no additional score impact. Some industries do abuse the inquiry system so shopping around and running credit at a bunch of auto dealerships can be detrimental.