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Top Credit Score Myths

Sep 11
2:42
PM
Category | General

When it comes to debt and credit reports, there are a lot of myths and misunderstandings.  Find out what actions Do and DON'T affect your credit score and learn some tips on what you CAN do to improve your score.

 

Myth #1  Checking your report will hurt your score

False:  When you check your credit report at www.annualcreditreport.com this is called a "soft inquiry".  Because you are not applying for credit, this type of inquiry does not have any impact on your credit score.  You should check your report by visiting this website once a year.  Review your credit history and make sure that all of your accounts are reporting correctly.  If you see things that you believe are not accurate, contact the credit bureau who is reporting the information.  They can help you get inaccurate information corrected.

 

Myth #2  Closing accounts will improve your score

False:  In fact, closing an old account that is still reporting as open on your credit report could actually lower your score.  There are two reasons for this.  The first relates to credit depth.  While a small factor, credit accounts that go back 10 or more years shows you have experience managing your credit.  Closing an old line of credit removes that depth from the report.  The second reason is a ratio the credit companies call "credit utilization" which is a ratio of your combined credit limits and your total outstanding balances.  As you close old accounts, the combined limit is reduced and it looks like you are using a greater percentage of your total available credit.

 

Myth #3  Paying off a debt eliminates it

True, but...: You do eliminate the obligation when you pay off a debt, but the evidence of the debt (and your payment history) can stay on a credit report for years.  If you paid on time, you want the history to stay on the report and be reflected.  On the other hand, negative information can also stay on the report for up to seven years.  If you've filed bankruptcy, that information can stay on the report for up to 10 years.

 

Myth #4  Each person has a "single" score

False:  There are three major credit repositories and each one has their own scoring model and additionally there are over a thousand different scoring models used in the credit market place. Some lenders may use a model that highlights use of consumer credit where another may be focused on your housing or installment credit use.  The score you see will depend on the information the lender is requesting.  When you check your report at www.annualcreditreport.com, you don't need to check your score too.  Just make sure the data in the report is accurate.

 

Here are a few things that REALLY DO help increase your credit scores.  

1.  Make all of your payments on time.  Even one late payment to a minor credit card will have a negative impact on your score.

2.  Keep your credit utilization at 30% or less of the total limits.

3.  Dispute inaccurate information.

4.  Avoid collections or judgments.

5.  Time is your friend.  There are no "quick fixes" for credit.  Negative information takes time to drop off the report so start now to make on time payments and your score will improve over time.

 

(Adapted from "11 Credit Myths: Don't Fall for 'Em" published by Experian. Article located at https://www.experian.com/blogs/ask-experian/11-credit-myths-don't-fall-for-em/)

 

This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.


Tips For Establishing Credit

Aug 28
1:55
PM
Category | General

Open a Bank Account

The first step in establishing a financial history is to open a bank account.

 

Get a Co-Signer

Piggy-backing on someone else’s good established credit history is another way to boost yours.  But be aware that any default of credit on your part affects the credit of the co-signer.

 

Secured Credit Card

Apply for a credit card.  Shop around and only apply for a card if you can meet the lender’s requirements.  Responsible use will help you build a good credit history.

 

Store & Gas Credit Cards

Since some gasoline credit cards are not revolving, they are sometimes easier to obtain than regular credit cards.  Similarly, department stores offer revolving credit for a specific purchase and this is sometimes easier to obtain as well. 

 

 

This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.


When you buy a house, a great deal of thought goes into it.  After all, you can’t just get up and move the next week. 

While you might not be able to get everything you want, it’s possible to make sure you enjoy your new house as much as possible. Here are some things to consider when you decide to buy a home.

1. Location

Where you live matters a great deal. When buying a home, think about your lifestyle and your expectations for the future. What amenities matter most to you?  Where would your kids go to school?  Think about safety, night life, shopping, walkability, grocery stores, public transit access, and how the location of your new home relates to all of them and try to buy in an area that fits your lifestyle choices.

In our rural town, city utilities aren’t available to all homes.  Consider the cost and upkeep of wells, septic systems, internet dish providers, and propane when choosing the location of your new home.

2. Commute

Another big item to consider when buying a home is the commute to work or school.  Think about how long you would be in traffic, on a train, or a bus. Is the time you spend on the commute worth a lower cost for you to live farther away?  Is the wear and tear on your vehicle and the extra gas expense worth it as well?

3. Space

The size of your family and your future family plans also dictate your priorities when buying a home. Do you plan to have more children, do you have pets, do you entertain frequently, do you need a home office?  Your family situation is unique, and you want to buy a home that matches your needs.

4. Type of home

Some people love the charm and history of old homes, and they love updating them and remodeling them. Look at your skills and abilities. Do you have the know-how to fix up a home, or the budget to hire someone that does? If you like the idea of putting in a little sweat equity to improve the value of a low-cost older home, go for it.

A recently built home has the advantage of new items. You have fewer worries about things breaking down and you know that the electrical and plumbing systems are modern.

If you want something absolutely perfect for you, you might consider building a home. However, building a home on your own requires a lot of effort. 

As you shop for a home, figure out which items are most important to you. Prioritize your list and buy a home that fulfills the most important items — even if you have to compromise elsewhere.

 

 


Are Moving Expenses Tax Deductible?

Aug 3
6:10
PM
Category | General

If you are qualified, you may deduct the expenses of:

  • Tolls and parking fees on the trip.
  • Up to 30 days storage of household goods.
  • Disconnecting and connecting utilities.
  • Packing and transporting household goods.
  • Mileage for use of your own car (or gas and expenses).
  • Transportation and lodging for yourself and members of your household while traveling to the new home.

Not all moves are tax deductible.  To deduct your moving expenses, you have to meet two tests:

Time – You must begin working as a full-time employee within 13 weeks of your move, and you must work at least 39 weeks during the 12 months after your move.  It doesn’t matter whether you were transferred by your employer or you took a brand-new job.

Distance – To meet this test, your new job must be at least 50 miles further from your old home than your old job was.  If you didn’t have a job before the move, your new job must be at least 50 miles from your old home.

 


What is Your Debt-to-Income Ratio?

Jul 26
11:48
AM
Category | General

One of the quickest and most revealing ways to get a handle on your current financial picture is to calculate your debt-to-income ratio.  

Lenders look at your debt-to-income ratio when they are considering if you are credit-worthy.

Your debt-to-income ratio is calculated by dividing monthly minimum debt payments, including your proposed mortgage payment by your monthly gross income.

 

For example, a couple with a combined monthly gross income of $7,500 making minimum payments of $800 on loans and credit cards, that has a proposed mortgage payment of $2300 has a debt-to-income ratio of 41% ($800+$2300/$7500 = .41).

 

 

 

This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.

 


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