Keep Your Credit Report Healthy
Most people would rather think about water skiing or tulips than credit scores, at least until they apply for a mortgage or some other kind of loan. But it’s a good idea to pay attention, however briefly, to your own credit situation.
Here’s How It Works
Credit scores give lenders an idea of your ability to repay loans. But your score isn’t determined by the lender; rather, several credit information bureaus compile and calculate them. Your credit report shows all of your outstanding debts: credit cards, mortgages, student loans, car loans etc. The report also provides your payment history with respect to each of these debts.
Things to Know
Each time you apply for credit, your credit report is checked which can cause your score to drop slightly. So when you receive those junk mail “pre-approvals” don’t be tempted to apply simply because they are offered to you. Too many open credit cards, credit cards charged to the hilt, or 30+ days late payments can cause credit headaches. Judgments and collections will cause bigger problems and need to be paid before a mortgage lender will close a loan. Please call us, we’re never too busy to offer guidance with your credit. There are often very simple solutions.
Now the Serious Stuff
It makes sense that mortgage foreclosures, bankruptcies and vehicle repossessions tend to give lenders pause. However, if enough years have passed and a clean credit history has replaced any “kisses of death”, lenders will take that into account.
No Need for Hypochondria
People who tend to be very careful with credit often think that being a few days late on a utility bill is going to sink their credit scores into bad credit risk territory. Not so! Payments made after the next due date are considered 30 days late. However, you’re still better off paying your bills on time–who wants to pay credit card fees or risk a slow mail delivery?!
Yearly Checkups
It’s a great idea to get a copy of your credit report yearly. Even when you know you’ve been careful with your payments sometimes the wrong information shows up on credit reports. A similar name or an incorrectly entered social security number can appear without your knowledge. You can challenge the error with the creditor, or with the credit reporting agency. Either way, it’s important to fix it as soon as possible.
Lynette Hensley
Associate Broker