HARRY’S TOP 5 MISTAKES PEOPLE DO TO MESS UP CREDIT SCORES

By
Real Estate Agent with Real Estate and Beyond, LLC SA535849000

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:

 

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

Conclusion:

PHOENIX REAL ESTATEIt 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.

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Make the Call, Set the Plan, Do the Deal$!

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Jan Green 06/21/2016 01:31 PM
Topic:
Home Buying
Location:
Arizona Maricopa County
Tags:
phoenix real estate
phoenix real estate first time home buyers

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Rainmaker
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Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

Great information here!  Well deserved feature post! I agree this should be taught to our children at an early age!

Jun 21, 2016 11:49 PM #33
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
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Sharon it seems many agree it should be taught in schools. Perhaps we need to start with one local school and it catches on.

Jun 21, 2016 11:51 PM #34
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Sam Shueh
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Mom never gets solicitation or junk mail she does not need a credit. She pays everything by cash especially cars.

Jun 22, 2016 12:37 AM #35
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
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Sam I buy all my cars at auctions for CASH

Jun 22, 2016 12:45 AM #36
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Mary Weiss
Zillow Group Mortgages - Seattle, WA
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Wonderful information - and I completely agree with you. Financial planning is a life skill that needs to be taught to all young people - it should be a high school requirement in order to graduate. 

Jun 22, 2016 01:52 AM #37
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
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Mary we do need this taught in high school otherwise nobody will have financial knowledge until later in life.

Jun 22, 2016 02:20 AM #38
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
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Nicely done, Harry.  Your conclusion is spot-on in my view.  Credit SHOULD be a part of curriculum in education well before we go out and enter that real world they often speak of.

Jun 22, 2016 02:47 AM #39
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
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Thanks Jason great minds think alike

Jun 22, 2016 02:57 AM #40
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Kat Palmiotti
Grand Lux Realty, 914-419-0270, kat@thehousekat.com - Monroe, NY
The House Kat

I definitely think students should get courses on credit scores/preparation, household budgeting, financial planning, and more. 

I've had several people approach me to rent or purchase and they had no credit at all and refused to get any. I have to admit I admire anyone who can live their entire life with no credit, but credit scores seem to drive most every purchase we make so they are important.

Jun 22, 2016 09:07 PM #41
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Harry F. D'Elia
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Kat I believe everyone needs credit in their life.

Jun 23, 2016 12:54 AM #42
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Susan Hale
Re/Max Realty of Defiance,Inc. - Defiance, OH
Northwest Ohio Realtor

Schools only have classes regarding financing,credit,etc for girls business math/bookkeeping classes years ago when I was in school.   Parents also need to be good examples and help instill this learning in their children. 

I now have an article I hand to each client with a list of items not to do when they are in the purchase process.  The items you mentioned are on that list.  Recalling in the past, 1 customer who went out and purchased a new truck with over $500 month payments.  He was so happy & proud of his purchase but not so happy when I told them that new monthly debt could affect their purchase ability for a house.  Sure enough their loan preapproval changed to the inability to purchase a house at that time.

Another incident involved a homebuyer who thought her credit was fine & forgot she had cosigned for an x boyfriend for his vehicle.  Long story short he was delinquent with payments which affected her credit score.  NEVER co-sign for a house or car loan unless you can afford that payment too!

Jun 23, 2016 01:04 AM #43
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
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There is a wise saying never get involved in another's business or sign for credit.

Jun 23, 2016 01:09 AM #44
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Lauren Selinsky Broker CRS
California Coastal Estates - Aliso Viejo, CA
"Your California Real Estate Broker" TM #oclauren

They can report to bureau it was not paid in full, but did you know you can send the letter to al bureaus that it is considered paid in full and it will show paid in full. 

Jun 23, 2016 05:28 PM #45
Rainmaker
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Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the post. I will bookmark this and share it with others.

Jun 23, 2016 08:59 PM #46
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Harry F. D'Elia
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Lauren please share more secrets with us. I did not know that fact.

Jun 23, 2016 11:37 PM #47
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
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Kat thanks for stopping in.

Jun 23, 2016 11:38 PM #48
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Chris Lima
Atlantic Shores Realty Expertise - Port St Lucie, FL
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This is great advice and I will certainly share this one. 

Jun 24, 2016 12:04 AM #49
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
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Thanks for stopping in today. Come back

Jun 24, 2016 12:06 AM #50
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Jane Chaulklin-Schott
TEAMCONNECT REALTY - (407) 394-9766 - Orlando, FL
TeamConnect Luxury Homes - Orlando, Florida, 32836

Harry,  I have often thought that this information should be a required course in High School; in fact, that no one graduates without a passing grade.  Who would think that the academic field of education does not recognize the importance of financial knowledge?   How can they allow a captured group of learners who are under their watch, then set them out into the world uneducated in something vitally important to their lives.  

Sep 15, 2016 01:24 AM #51
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Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
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Jane Chaulklin-Schott we have to start changing our education system

Sep 15, 2016 02:32 AM #52
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