Well, I have to assume that many of my readers now know how crucial credit is in the purchase of their primary residence, rental, lease of residential and commercial property; as well as any other purchase that you will make in the future using a mortgage, installment loan, line of credit, credit cards etc.
Having a high credit score is first and foremost dependent and determined on timely payments of your bills and credit cards each and every month.
Late payments, past 30 days, will have a negative affect by reducing your credit scores by at least 25 basis points.
Banks and lending institutions will always use this as a way of determining to what extent you are a possible credit risk or not.
I have a simple method of paying all my bills, by using an expandable folder for every day of the month and placing my bills in a slot that is seven days before the due date; providing me that extra cushion of time to make sure I am on time and never late!
Also, for the last couple of years, I have been making the majority of my payments by phone, eliminating the possibility of hacking into my online accounts.
It is extremely easy to do and very expedient and efficient; less time than logging in to my Ipad.
I have never experienced any issues, thus far by doing it this way and most importantly, I always write down my confirmation number as proof of payment.
I also, in most instances, make the payment on the last due date; although, I do not suggest my readers do this, unless you are amazingly disciplined and don’t forget to make your payments by the due date.
I would rather use their money, while I use my money in other ways to earn higher returns, but will always pay by the due date.
To attain a higher credit score, one must have at least 3-4 lines of credit, as an example, a Visa and Master Card, and 1-2 store cards.
Even if you are just starting out, Capital One and I am sure a few other banks, will allow you to go online and be able to setup your own credit line, by wiring or mailing in the amount of money that you want to begin with.
This is called a secured credit card.
You then can charge up to the amount of your specific credit line that you have established.
However, I suggest that you do not use more than 25-50 percent of your available credit in the beginning, so your credit scores will rise much faster.
Too much outstanding credit or use of too much of your lines of credit, can create red flags for the credit card companies, who regularly report on a monthly basis information about how you are handling your credit and also the amounts outstanding credit and whether you are on time or past due.
Too many past dues has an adverse effect on your credit scores.
A little trick I learned over 45 years ago to gain extra time to pay on your credit card accounts, is to determine their bill closing dates on all your cards and put them in an numerical order based on those dates.
Then, when you want to charge something, always use the card that has the bill closing date at least one day before the actual day you are charging.
This charge in affect, will miss the next bill you will receive from your credit card company and end up on the following month’s statement, thereby providing you an extra 15-30 days float on your monthly statement.
As long as you pay your entire bill off each month, don’t carry any balances, you will not incur any finance charges.
You will have extra “free time” on those purchases that you had made previously, because you were able to miss the bill closing date.
Moreover, short sales, foreclosures or bankruptcies, will have an even greater detrimental effect on your scores, which can be as low as 450, the bottom of the credit scale or if you are minimal credit risk and rank in the top 1 percent club, as high as 850.
Keeping credit healthy is just as important as staying physically and mentally healthy, because poor credit can have a real negative effect on your life and can truly demoralize one’s psyche and can in some instances, cause mental, marital and physical issues.
We all may know someone that is having financial issues with their credit; can’t buy things on credit, must pay cash, probably can’t purchase a home, condo, co-op or lease a car; or the interest rates are substantially higher, due to the greater credit risk of non-payment.
It’s not a very happy and wonderful feeling, but you can fix your credit and increase your credit scores over a 6-12 month period, by hiring a specialist that does just that.
You may have erroneous information on your credit history, or worse, you have a common name and has derogatory information relating to another person with the same name.
Bankruptcies, foreclosures, short sales and many times divorces (one spouse ruining the credit of the other by non-payment) will stay on your credit profile for two to 10 years.
But I have helped people get mortgages after only two years, by fast tracking to re-establishing their credit (we use a very reliable, trustworthy and professional credit fixing company) to at least 645, which is a score that potentially aid you in getting a mortgage, but you will pay a higher interest rate. Remember, your credit, outside your driver’s license, is the most important credential you have today and so you should use it but don’t abuse it!
Bonus Information for our Readers:
If you would like to receive a digital copy of “Unlocking the Secrets of Real Estate’s New Market Reality, or “Our Seller’s Guide for “Things to Consider When Selling Your Home” just email me with your name, email and cell number.
Phil is the owner of Turn Key Real Estate at 7 Bond St. in Great Neck. He can be reached by email: Phil@TurnkeyRealEstate.Com or by cell (516) 647-4289 to answer any of your questions.