Managing your credit score
As a real estate agent in Wilmington, NC I have help a number of buyers whether they have been first-time home-buyers, investors, and relocators find their perfect house. My goal working with buyers and sellers is keeping them informed on current market conditions, and helping them achieve there goals. Currently I’m working with a great couple looking to purchase their first home in Wilmington, NC. During my first initially appointment I discussed with them the home buying process. I make it a point that we collectively come up with a home buying plan, I have found this to be a get tool. It has not only saved my clients time, but also money. During my appointment we went over how the qualification process works and how their Credit rating plays a factor in their purchase amount. Needless to say I realized that their rating was not as positive as I hoped for. I understood that we needed to take this from a different perspective, not to look at this as an obstacle but an opportunity. I knew it was a great time to start improving it and helping them get started. Here are a few things we discussed.
A credit score is a number that lenders us to help them decide, “if I give this person a loan or credit card, how likely is it that I’II be paid back on time?” Also called a risk score, this number is a statistical measure of the risk that you’ll be able to repay the debt as agreed.
If you are planning on making a major purchase, taking out a loan or applying for a credit card, you’re going to need a good credit rating.
Managing Your Credit ScoreFind out where you stand.
The First step towards developing a better credit score is to determine where it currently stands. Start by checking with the major credit reporting agencies (CRA) listed below. You’re entitled to one free report per agency, per year, and you have the rights to dispute any mistakes, so request that each CRA send you a copy of your report.
Figure out the Facts
Credit reports in hand; take a good hard look at the data in front of you. Credit reports are rarely as spotless as you think- that one late payment on your Visa can stay on your report for up to seven years (long after you’ve forgotten about it). In addition, in October of 2004, CBS News reported that nearly 80% of credit reports contain at least one error, proving how vital it is to make sure that everything is accurate.
After identifying any discrepancies, you need to eliminate them. A dispute form usually is sent along with your credit report or you can request one from the CRA’s website so fill out the form and send it back to the CRA as registered mail. Make sure you document each step that you take in clearing up your report in case you need a backup later on. Fortunately, the law is on your side, stating that any item that is not verified as accurate must be removed from your report.
Call in the clean-up crew.
You’ve cleared up any errors, but there are still a few legitimate dark spots on your report. What’s a person to do now?
Clean up- Identify any depts. That are still pending, and setup a plan for eliminating them (discussed in my previous blog click here). Clearing up debt can take time, which makes it even more important to get started immediately. Remember that you have the right to add remarks to your file, so take the opportunity to defend yourself and point out positive areas of your reports, such as highlighting a loan that you paid on schedule.
Fix, rinse, and repeat
Time is your best ally when it comes to your credit report- consistent payments (no matter how small, so long as the meet the minimum) prove that you are responsible enough to repay loans as promised. Over time they will outweigh the negative points on your credit report.
Get regular- In order to avoid any ugly surprises, check your credit information regularly, especially 60 to 90 days before a major purchase (like for a car or home.)
Prove reliability- While there are not quick fixes for upping your score, taking out a loan that you don’t need and then paying it back in a short span of time can prove that you’re a good credit risk.
Too few or too many- The ideal position is to have a few lines of credit, never more than what you could afford to pay off on your income, and with none of them maxed out. Cancel old cards that you never use, but don’t max out one giant line of credit by putting your entire debt on it. Prove your self-control by having between two and four lines of credit with a minimal or no balance on each.
By Nilesh Jethwa
Posted By Nilesh Jethwa
Nilesh Jethwa is a local REALTOR in Wilmington, NC.
To Contact Nilesh Jethwa please Click Here!
To read part 1 of my blog series Clearing Your Debt click here……