First Time Home Buyer Tip of the Week – 04/08

“What drags down my credit score?”

I apologize if I’m repeating myself here but I believe it might be worth digging into a little deeper. 

The credit cartels influence almost every aspect of our financial lives in today’s world. Pretty nuts if you believe the reports that as many as 1 in 4 adults have incorrect information reporting (HURTING) their credit scores, therefore costing them countless, non-recoupable dollars. 

It’s important to be aware of the accounts appearing on your credit report and to understand the effect they’re having on YOUR credit score. There are typically 3 factors that drag your scores down the most.

1)     Collection – Judgement Accounts – These are typically the result of unpaid medical bills and are very common in today’s world. Unfortunately, time is the only factor that will help your score rebound from these accounts. If you’re in the process of paying off one of these types of accounts, be sure to keep any documentation you receive….it will be useful later on!

2)     Revolving Accounts – These are typically what we call “credit cards” and are also very common today. You can sign up for one at just about any retail shop! The important thing to remember with these types of accounts is to Manage Your Debt. Wait, WHAT!? 50% is the magic number, if your balance is currently over that, your score will start to decrease. Once you pay it back under 50%, your score will rebound almost immediately.

3)     NO Accounts – This is a common issue for most First Time Home Buyers and a growing one with older adults fed up with paying interest. Intuition would tell you that a person with no accounts on their credit report would be a person that’s great at managing their debt and therefore should have higher credit scores. Not to the credit cartels! They not only want you to have an array of accounts, they want you to use them every month and carry a balance of around 20%. 

All I can say is it’s their world and we just get to play in it! 

Matt Shymanski – 314-761-5903 - [email protected] - NMLS 1572469