All You Need to Know about Credit...
Today I wanted to take some time and talk to you all about
credit reports. We have had a lot of inquiries in the last few months
that are mostly concerned with what people can do with their credit
reports or how they can improve their credit score. I'm going to shine
some light into these questions and hopefully clear up some
misconceptions you might have about these things.
Credit Score
This is one of the most important numbers that you have.
This score is basically a number telling a lender what the potential risk is in lending you money.
What is interesting is that people don't realize today that medical
insurance, auto insurance, prospective jobs and apartments to rent, all
of these things are predicated on by your credit score. So although you
may not be interested in these things, it is important to stay on top of
your credit.
So, there are three credit reporting bureaus and you will get what we call a FICO score.
This score can range anywhere from 300 to above 800. The higher the score you have, the less risk there is to the lender.
With a better score you will also get better rates and better terms.
How is this score calculated?
35%
of your score is based on payment history, 30% is based on the amount
you currently owe, 15% is your credit history, 10% comes from new credit
inquiries, and another 10% comes from the current types of credit that
you have in use. With this in mind, I have been working on a lot of
short sales and foreclosures lately, and these things will remain on
your credit history for 7 years, but keep in mind that short sales only
affect your credit for about 2 years. Foreclosures will continue to
effect your credit for 7 years. If you file for bankruptcy, this will
stay on your credit for 10 years.
You are entitled to a free credit report every year, and my advice would be to make it a New Year's resolution to check your credit every year on
www.annualcreditreport.com.
Go over the report carefully and make sure that there aren't any debts
on there that are not yours or check to see if the payment history is
accurate.
One of the best ways to escalate your credit score is to eliminate any debt that you might have. There are some other creative strategies to improve your score, and if you'd like to know about them, just give us a call.
Do you need the help of a credit repair company?
A
lot of clients have been asking me if they need to utilize a service to
improve their credit score, and the answer is NO. These companies can't
do anything for you that you can't already do for yourself.
So my advice is to get a copy of your credit report and go
over it carefully. If you have any questions or concerns then please
feel free to call us and we would be happy to help you out or refer you
to someone who could give you assistance.
As always, if you need any assistance with real estate in
Portland, or if you want answers about your credit, please give us a
call at
(503) 245-9000 or email us at
spring@springsteam.com.
