≈ Maintaining Good Credit
- Setting up on-line payments for your bills is any easy, secure and convenient way to simplify your finances. Automatic payments will make sure your bills are paid on time and will prevent you from incurring any future late fees.
- Charge small amounts regularly on each card -- but not more than you can pay off each month.
- Use your credit wisely. Do not open unnecessary credit accounts. The extra 10% off you save to open a department store credit account may be quickly offset by the possible decrease in your credit score because (1) you may spend more, and (2) you are adding an additional trade account and additional inquiry to your credit file. Also, before you apply for additional credit, make sure your rent, mortgage and car payments can be easily met. If not, do not apply for additional credit until your income and debt are under control.
- Be cautious with credit card solicitations. Just because you receive one of these offers does not mean that you can afford the additional credit. Many companies are soliciting consumers who based on their past spending histories will charge big balances at high interest rates.
- Do not close credit accounts unless it is absolutely necessary in order to close a loan. When you delete a trade line you also delete the corresponding credit history and may inadvertently lower your credit score.
- It is always better to pay off credit cards before an auto or mortgage loan to get the biggest score increases.
- We will review your credit file at least twice a year, with your consent and correct any errors and omissions.
Want more information, call today for your free consultation...
610-437-2960 or 1-877-225-9810
Credit Scores: Why Should I Care?
It's not just banks and lenders that rely on credit scores to help make important credit decisions. Landlords, employers, insurance companies, and even cell phone and other utility companies all reportedly utilize credit scores to help determine their business and credit relationships with consumers. This means that your credit is the most important component of your entire financial portfolio. Because of this, monitoring and managing your FICO score is vital, especially if you're looking to buy or refinance a home anytime in the near future.
The FICO scoring system was created in the 1960s by Fair Isaac Corporation and has been the standard for lenders since the 1980s. FICO credit scores typically range between a low score of 350 and a high score of 850. Under the FICO system, securing credit becomes less expensive for borrowers with higher scores (those who represent the least risk) and more expensive for borrowers with lower scores (those who represent the most risk). In fact, when it comes to a mortgage, a lower credit score could easily cost a consumer hundreds of thousands of dollars more in interest throughout the life of the loan, compared to the same loan with a higher score.
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FICO Scores
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APR
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Monthly Payment
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760-850
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5.751%
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$1,751
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700-759
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5.973%
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$1,793
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660-699
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6.257%
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$1,849
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620-659
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7.067%
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$2,009
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580-619
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9.165%
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$2,449
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500-579
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10.194%
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$2,676
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(30 year fixed-rate mortgage on $300,000)
Not long ago, a FICO score of 680 was pretty good. In a tough credit market like today's, however, a 680 could be devastating to the bottom line of consumers looking to buy or refinance a home. In fact, thanks to Loan Level Price Adjustments (LLPA) from Fannie Mae and Freddie Mac, having less than a 720 in today's credit environment will cost you big: up to 2% in points or up to a 1% increase in your interest rate!
LLPAs are mandatory surcharges based strictly on credit scores. They are additional fees paid to Fannie Mae or Freddie Mac, not your mortgage professional. Analysts suggest that imposing these "penalties" is a blatant effort to recoup - and to help lessen further losses - on foreclosures. The surcharge could mean thousands of dollars for borrowers who do not monitor and maintain a good credit rating.
If you're thinking about buying, selling, or refinancing a home, you have to be credit ready. Give us a call today for a free credit consultation. We'll pull your credit and see where you stand. Remember, effective credit repair, if necessary, could take up to 3-6 months, so act now and be credit ready in no time.
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