Saturday, February 24, 2007 11:19 AM
Christopher Smith
The Top Ten Factors You Should Know About Credit
When you apply for a mortgage loan and are approved as a buyer, this is your ticket to buy. This gives you the clout to drive around with your Cedar Rapid's Realtor, view houses, choose a house, bid on a house, and buy that house. Without credit reporting agencies or top loan officers like Jeff Harding of Skogman Mortgage (www.iowamortgageguy.com) we would all just lay claim to land like they did in the old days with guns and knives. However, we as consumers are rarely educated in this area of our lives that is so very important for our future success as providers for ourselves and our children. Let the education begin with the top ten factors you should know about credit:
Your "Credit Report" is your likelihood to pay something back over an extended period of time. It gives lenders a personal "window" into your future financial abilities.
If you are a new credit user; someone who has just graduated from high school or college, you need to have an account open with either a department store of credit card company for at least six months to build up any type of "credit history" with that agency.
Keep credit card debt to less than 50% of your credit limit at all times. Anything more and that signals potential trouble for a lender that is trying to determine if you can manage your debt load or not.
When should you apply for a mortgage loan? When your credit is at it's absolute best. Don't buy a brand new car a month before applying for a mortgage loan. Your loan to debt ratio will increase and might "bump" you out of qualifying for a certain price range of houses or condos in your area.
Your credit rating DOES NOT take into consideration your income; only your responsibility to manage your income and pay off credit card debt.
When you are "shopping" for a mortgage loan, you have a two week window to rate shop with as many lenders as you see fit. This is called "Deduping" and will NOT affect your credit rating, no matter how many inquiries over this period of time.
The #1 way to RAISE your credit score over a period of time is to pay your bills on time, and to be current with all of your bills.
Start your children on the road to success with creditors by placing them on your loans and credit cards when they are sixteen years of age. Even though they are not able to pay your bills, they are "ghost members" and can benefit from having their name associated with your good credit.
Universal Default is when credit card companies have a right to lower your credit card limit without notifying you, if you have been late 30, 60, or 90 days, have defaulted on an account. So say that you did not pay your Sears card, but your Visa bill is always paid on time. Your out to dinner with your date and proudly display your Visa card to pay for the bill. The hostess comes back and says that your CC has been denied for lack of sufficient funds. You boast to your date and the entire dining room, "But I've got a $1200.00 credit limit on this bill and I pay it off every month." Matters not to the waitress as the Visa company gathered information from your other credit cards that you had a "no-no" on another credit card, therefore it lowered your credit limit substantially enough to cause problems later down the road.
The Fair Credit Reporting Act of 1996 (and since has been amended several times) states that consumers have a right to see their credit report and know whats in it. Visit www.annualcreditreport.com for your credit history.
For more information on credit/debt issues, contact me, Christopher Smith, your full service Cedar Rapid's Realtor at 319-329-5988 or email Christopher@skogman.com. Don't forget that my website www.ChristopherSmithRealtor.com has lots of information beneficial to the buyer/seller/ and mortgage loan seeker. Thank you for reading this blog!