Credit 101, Part 2 …and yes, Client appreciation night!

by | Jun 13, 2015 | Real Estate | 0 comments

Upcoming free (& non-promotional) Home Buyer Education Classes

Monday night, June 15, from 5pm-8pm
Marshall Community Center, conference room
1009 E  McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday, June 27, from 11am-2pm
Vancouver YMCA, conference room
11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Road/112th Ave

….we also have home seller classes available too.

…if these dates/times don’t work for you, we have others.  Check out the website for more class dates, times, and locations.  PLEASE always check  the web  site www.learningtobuyahome.com  ;  for any changes regarding the classes!

Remember…with reservation…we will throw in lunch, or dinner!  😀
~~~~~~~~~
Happy late Saturday, or early Sunday morning!

I know, I know….but I have to keep reminding you!  😀  We have our semi-annual Client Appreciation Night coming up.
🙂  Chris Berg (cberg@pcmloan.com & 503-320-0925) and I would like to invite you, your family & friends to come watch a movie with us!  Saturday, June 27th from 3pm-6pm for the new Pixar movie, Inside Out.
Just let me or Chris Berg know how many tickets you will need.  😀

I hope you are being able to keep cool this past weekend, and today.  Personally, I am not a heat fan….anything above 80 means my AC must go on.  Does that make me a heat wimp?  Yep….and I am ok with that!!  😀  This week I am going to talk a bit more about Credit for you….as always, call or email either Chris or I with any questions.

So, let’s talk more about Credit this Week…

15 Things That Hurt Your Credit Score
Your credit score is the three digit number that is looked at by any lender, your insurance agent, and even potential employers…among others. These are 15 things that can hurt your credit score.
Paying Late

Since 35% of your credit score is your payment history, paying late (or not paying at all) can really hurt you.  Why is this such a big number?  Remember that your credit score is how creditors see how likely you are to pay your bills, and pay them back.  With banks and creditors, the big word is RISK.  When you pay your bills late, you look like a much bigger risk…not stable or reliable.  Consistently being late on your credit card payments, and other bills will hurt your credit score.  You need to pay your bills on time to preserve your credit score.

Not Paying At All
This ties in to the last one. If paying your bills late is bad, then completely ignoring your credit cards, and other bills is much worse. Each month you miss a credit card payment, you’re one month closer to having the account charged off. A charged off account is one that the creditor has given up receiving payment on.
Having An Account Charged OffSee how this works? It really just builds on itself. When creditors think you’re not going to pay your credit card bills at all, they charge off your account. This account status is one of the worst things for your credit score.
Having An Account Sent To Collections

Creditors often use third-party debt collectors to try to collect payment from you. Creditors might send your account to collections before or after charging it off. A collection status shows that the creditor gave up trying to get payment from you and hired someone else to do it. The reflects on your credit worthiness, and for the bank this is risk. Remember that risk is bad….

Defaulting On A Loan
Loan defaults are similar to credit card charge-offs. A default shows that you have not fulfilled your end of the loan contract.

Filing BankruptcyBankruptcy will devastate your credit score for a couple of years. Depending upon the type of bankruptcy you claim, it is either an agreed amount to be paid back over a contracted amount of time (chapter 13), or a complete write-off to a blank slate (chapter 7). Either way it takes time to build your credit back up. You can start with a high interest loan, or with installment credit cards where you pay up front. It is high interest because you are a high risk. Now…some folks will tell you that it is a good idea to seek alternatives before filing bankruptcy…like consumer credit counseling. Be careful with consumer credit counseling…some are reputable, and ok, but others? Yeah…not so much! Some are nothing but scams. Yes, bankruptcy does take time to get over, but for some folks bankruptcy can be a good thing. We are often not taught about credit so we make terrible mistakes with ours…or we have terrible luck…or medical issues and bankruptcy can be our only way out. In early 1997, my husband and I declared a chapter 7 bankruptcy. About a year later we got a car loan to build up our credit again….at 20% interest. Yeah, not kidding. Well, we paid that off, and got a couple of credit installment cards. In 2001, we bought our home. After bankruptcy you can get a home loan in 2 years from discharge with a showing of credit worthiness. So is bankruptcy the worse thing you can do to your credit? Yes, but sometimes it is what you have to do, and it isn’t the end of the world. Talk to a lender like Chris Berg at Pinnacle Home Mortgage (  chris.berg@pmblending.com) before you make any decisions as a good lender can help you decide what is the best course of action for you. An excellent lender will sit down with you and make a plan as to what to do with your credit, and give you step by step instructions.  Chris and I have a philosophy that an ugly truth is better than a pretty lie, and that we are here for the long haul to help.  We know that some folks are ready now to by a home, and that some folks just need some help.  That is ok…we have ALL been there at one time or another….  🙂
Having Your Home Foreclosed On

Getting behind on your mortgage payments will lead your lender to foreclose on your home. In turn, the late payments will hurt your credit score and make it harder to get approved for future mortgage loans. It is about 3 years after foreclosure before you can get another home loan.

Getting A Judgement

A judgment shows you not only avoided your bills, the court had to get involved to make you pay the debt. While they both hurt your credit score, a paid judgment is better than an unpaid one.

High Credit Card Balances

The second most important part of your credit score is your level of debt which is measured by how you use your credit.  Having high credit card balances decreases your credit score because a creditor thinks you are not using credit wisely.  Some questions that it brings up in a creditors mind is, “Are you suffering economically and having to rely on those cards to live?”  “Do you not have enough income coming in to pay your bills?”  Having high credit balances (money owed) in relation to your credit limits is a sign of risk in a creditors mind.

Maxed Out Credit Cards

Maxed out and over-the-limit credit card balances make your credit utilization 100%. This is least ideal for your credit score. It shows that, in case of emergency, you have no back up plan. A person with no credit cards will have a lower credit score than someone with 3 credit cards that have a balance of less than 30% of the credit card balance. A person with 2 credit cards of $3000 limits each has $6000 of emergency funds…just in case, but a person who has zero cards has no emergency funds.
Closing Credit Cards That Have Balances

When you close a credit card that still has a balance owed, your credit limit drops to $0 while your balance remains. This makes it look like you’ve maxed out your credit card, causing your score to drop, and now that credit card no longer shows active as well. Don’t close your credit cards as it is a hit on your credit score.
Closing Old Credit Cards

Yep…we just keep building on to the last one. Another component of your credit score, 15%, is the length of your credit history – longer credit histories are better. Closing old credit cards, especially your oldest card, makes your credit history seem shorter than it really is.
Closing Cards With Available Credit

If you have several credit cards some with balances and some without, closing those credit cards without a balance owed due decreases how much you have of emergency funds.This doesn’t make sense that this would hurt your credit, does it? But again…risk…

Applying for Several Credit Cards Or LoansCredit inquiries account for 10% of your credit score. Making several credit or loan applications within a short period of time will cause your credit score to drop. Keep applications to a minimum. Most of know that every time you make a credit application it ‘hits’ your credit score. Why? To a creditor the more applications for credit you put out the riskier you look as they wonder why you need more credit. Yes…even those “would you like to apply for a XX store credit card to take 25% off your purchase today?” that we hear every day at the store can hurt your credit…every time you do it.
Having Only Credit Cards Or Only Loans

Mix of credit is 10% of your credit. When you have only one type of credit account, either loans or credit cards, your credit score could be affected. This factor mostly comes into play when you don’t have much other credit information in your credit history.

One last thing you need to remember is that a real estate agent is not a sales person.  It is not our job to ‘sell’ you anything.  We are assistants,    advisers   , guidance, and help.  You should not feel as if your agent is trying to sell you a home, or anything else, our job should be to help you in getting the home you want.  This being said remember that you do not get T-Bone steaks for the price of hamburger…Look ONLY at homes within your budget.  ALWAYS ask questions, and expect answers without a lot of lingo.  I was always told that if you can’t explain something in a way that the other person can understand clearly, it is because you don’t understand it yourself.  🙂

Information is power, and I hope that I am able to help you.  Good luck, and as always…May the odds be ever in your favor out there….  If you are looking for a real estate agent, I would love to be able to help you.  
 
As always….this is just a quick overview…. please remember that your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your homebuying adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.

If you have any questions about this, or something you have heard…or if you would like me to help you with your homebuying adventure, please call, email,   text, or facebook me anytime.  I am, as always, happy to help!

Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers.

.  ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…

Next Week:    Mortgage vs Rent…How does that work?

Last Week:  Credit 101, Part 1…How is it calculated?
                     
Have a great day, and I will talk to you soon,
;-D

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA
360-903-3504

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