HARRY’S TOP 5 MISTAKES PEOPLE DO TO MESS UP CREDIT SCORES
The banks have tightened up lending practices since the market crashed in 2008. Many people do not feel encouraged or worthy that they can obtain a mortgage. Many consumers are still feeling the hits from that time. However, many buyers do not take the necessary steps in order to be in position to purchase a Phoenix Real Estate Home. Real estate agent would be able to recommend a mortgage professional to do a thorough loan analysis to determine if a person can purchase a home or not at this time.
We are starting to see the banks ease up on lending practices to allow more people to purchase their first time. One must be wise with their credit. Credit card companies are decreasing people's credit line and/or shutting down the card without proper notification. Many people are upset over this practice because now you are dealing with a person's credit score.
We have all been issued a three digit number which determines our credit worthiness. My grandmother told me to pay my bills on time and in full. That was wisdom to me. However, times have changed and abusing credit is a way of life. I would like to discuss the top 5 mistakes made when dealing with credit:
- CLOSE ESTABLISHED CREDIT CARDS-This will take away from a Peron’s line of credit and the amount of months it has been open. One needs at least three great lines of credit with an established history of online payments. Closing great established lines of credit will decrease one's score according to my expert.
- Missing Payments-Many people are missing their mortgage payments while doing short sales and/or loan modifications. That drags the credit score down more than 100 points. Other people forget to pay a $25 payment on a credit card and now the credit score has dropped by 80 points. Make your payments on time and in full.
- High Balances-Experts state that people should not use more than 30-50% of available credit at all times to maintain a high score. Over 50% will bring the score down even by making monthly payments on time. Pay down as much as possible to boost the credit score up.
- Settling Past due Accounts-People settle for less than what is owed to credit card companies every day. However, many people realize that they will receive a 1099 at the end of the year for the difference. This is called a deficiency judgment and is considered income earned for that year. One can negotiate with the credit card company during the settlement talks. However, they will report it to the bureaus if not paid in full. This will stay on the credit report for 7 years.
- No Credit-People have been taught to pay cash for everything. That is great. However, one needs a credit score with history to obtain financing for a car or home. People have to be taught more about credit and the power of leverage with a conservative background. Credit is part of our lives that cannot be ignored. No credit then a person will not have a credit score.
It is sad that the public school systems do not teach pupils about the importance of establishing credit worthiness during youth. Many people do not establish their credit until they have graduated college with the first job. Many times it is out of plane ignorance. We must continually educate our clients when it comes to credit and the importance of having and maintaining a high credit score to obtain conventional financing for purchasing a home.