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Keep
Your Credit Report Healthy
By Lynette Hensley |
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.
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