Keep Your Credit in
Check: expanding your wealth-building options
ITIPress.org - Victoria
Licensed Mortgage Broker and Lic. Real Estate Agent.
She also holds a Bachelorís degree in International Finance and Marketing
from the University of Miami
Whether you are
buying a house, car or boat, keeping your credit in check is important. In
recent years we have seen various changes take place in the economic
landscape that call for revisiting this topic, especially for executives.
Contrary to popular belief, income has nothing to do with your actual
credit score. A good and acceptable credit score is 620+. Over 660 is even
better as it expands the options available to you. The economic downturn
of the last two years, the increase in two-income families, and the
escalating occurrence of identity theft make checking your credit crucial
to keeping as many of your options open regardless of circumstances. This
is particularly important if cash-flow becomes an issue, or the roof needs
repairing, and one needs to tap into their credit resources.
As a mortgage
broker, I have seen very successful business owners and high-income
executives with credit stresses, most which can be easily repaired or
avoided altogether. Here are some tips: Two-Income Families- Separate your
credit cards and debts. Combining debts is a carryover from the one-income
family days when it was necessary to have credit cards in both names so
that access was provided to the non-income earner. Today, this isn't
necessary and can actually limit a couple's choices. By separating debt,
each partner can better control and be responsible for their spending and
Additionally, if one
partner is in agreement, they can place a large purchase such as a home on
their credit report, leaving open the second partner's debt load for other
"joint" purchases. The idea is to better manage your credit while
maximizing the couple's options. Separate debt becomes even more important
if one partner becomes a victim of identity theft. This leaves the other
partner's options and credit less affected or completely unaffected.
Use a maximum of 20
- 30% of your credit limit- Many people don't know that paying off your
credit bill at the end of the month doesn't actually improve your score.
Credit bureaus are wired to reward borrowers to carry debt, to a point.
Since most people carry debt anyway, be sure to keep yours in check by
seeking credit cards with the lowest interest rates. You may also, and
preferably, call your credit card company and ask them to lower your rate.
Also, keep in mind that increasing the amount of debt you carry on each
line over 30% of the credit limit begins to have a negative affect. It's
Check your credit
once annually, no more than twice. As a mortgage broker, I have come
across clients that pull their credit once a month. This is a huge mistake
and will negatively affect your score, regardless of who pulls the report.
To get an accurate picture, be sure to request a tri-merge report which
pulls information from the top agencies, Equifax, Transunion and Experian
in one report. This will save you time and money, and give you the report
that the banks will be looking at.
Beware of on-line
mortgage finders. I am not saying this because I am a mortgage broker.
Some online companies that find lenders to send you a quote, refer your
information to several lending institutions that will individually and
separately pull your credit report. This means 4 to 6 inquiries into your
report. If you are not satisfied and ask for more quotes, that's another 4
to 6 inquiries. This is disastrous. By going to a live mortgage broker,
you avoid this. A knowledgeable broker will pull your report, and
immediately know which programs and lenders will be best for you. They
will then request competing quotes based on one report.
Pay your mortgage
first. This should be a non-negotiable. Even one late payment can affect
Use your oldest
credit cards first. Credit history and the length of time of your
established credit is very important in your score. Use your oldest credit
cards first to keep your established history going. This indicates
stability and continuity to bureaus.
For more information
consult your trusted financial advisor or mortgage broker.
All progress begins by asking a better question." - Robert Stuberg