Establishing credit and wisely managing your credit becomes easier when you know how. You'll feel empowered by taking knowledgeable steps towards good credit, and you'll be on your way to purchasing real estate and greater financial freedom.
If you plan to finance real estate, either as a home buyer or an investor, avoiding these common credit mistakes will help you with your credit score and save you money in loan costs.
14 Common Credit Mistakes
1. Using expensive or undesirable types of credit costs too much and is negatively scored.
2. Accumulating too many lines of credit or too many credit cards causes credit report remarks like "too much consumer credit."
3. Only paying the minimum due keeps balances too high.
4. Being maxed out on any credit card or line of credit causes deep drops in scores.
5. Taking cash advances costs higher interest and extra fees.
6. Exceeding limit and having to pay over-limit fees is a negative with creditors and causes "high proportional amounts owed" remarks on credit reports and subtracts credit score points.
7. Paying a day or more late causes unnecessary late fees and often increases interest rates.
8. Charging more than you can afford causes a snowball effect of amassing debt with no easy way to pay it off.
9. Letting someone else use your credit, such as co-signing a loan, raises your debt-to-income ratio and possibly adds "too many consumer accounts" on your credit report, which lowers your score.
10. Ignoring credit problems causes unnecessary negative impact. Talk to creditors before being late and make arrangements. This action heads off negative reporting to credit bureaus.
11. Failure to report address changes to creditors causes misplaced bills and late payments.
12. Using partial name, different names, initials instead of whole name, or forgetting Sr. or Jr. causes mix-ups. Use your full legal name to protect you from confusion with similarly named borrowers.
13. Failure to report name changes to creditors also causes confusion.
14. Not checking credit report frequently is one of the most common mistakes consumers make.
You can buy real estate with poor credit, but you will save thousands in loan costs if you maintain good credit. A bad credit report leaves home buyers with sub-prime loans which have higher point charges, prepayment penalties, and higher interest charges, which therefore cost more money.
For instance, a mortgage loan of $150,000, 30-year, fixed interest rate of about 5.72 percent costs around $870 a month. Poor credit scores raise the interest rate over 9 percent and the payments over $1,200.
As you see from these payment differences, good credit means that you can finance a more expensive house with the same income, or save $330 each month.
Credit Requirements for Mortgages
Credit needed to buy real estate is not the same as good credit. Besides your credit score, mortgage lenders consider your debt-to-income ratio and other credit matters, unlike other credit grantors. Your debt-to-income ratio is the comparison of mortgage payment, including taxes, interest, and insurance to your total gross monthly income. Real estate lenders also consider your employment qualifications and your overall debt ratios. Understanding the difference between good credit and the credit needed to obtain real estate financing helps you buy houses!
Avoiding credit mistakes helps you get strong credit and keeps your credit scores up.
Copyright © 2005 Jeanette J. Fisher. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.)
Jeanette Fisher helps first-time home buyers and beginning real estate investors build strong credit for mortgage financing. Get your free "Credit Tips for Mortgage Financing" report at http://www.recredithelp.com
Article Source: http://EzineArticles.com/?expert=Jeanette_Joy_Fisher
Monday, May 14, 2007
Sunday, May 13, 2007
YOU MUST CHOOSE THE RIGHT CREDIT CARD FOR YOU BY PAT WOOD
You are ready to choose a credit card, but you don't know which
one to choose. Let's break a few of them down to make the choice a
whole lot easier.
The question is which credit cards are right for you. Not all
credit cards are the same. Some have a fixed rate,which simply means the APR doesn't change, or at least not that often.
Most credit cards are open lines of credit, that you can use to make purchases. Most of them are unsecured, while a few
are secured or prepaid. Prepaid credit cards are offered by a lot of major companies and act some what like a debit
card, because you will need to open an account and your credit card will be funded by this account. These are great for people
starting out with little or no credit or rebuilding credit. Low interest rate cards, are ideal for people with good credit
that would like to take advantage of reduced interest rates. Some credit cards have an annual fee, while others do
not. Some earn reward points. Store credit cards work similarly to regular credit cards, except there is no annual fee,
and the card is only good for purchases at that particular store. These store cards are also effective at rebuilding
credit.
You would be surprised at the number of people who don't bother to
compare credit cards before applying for them. You should compare the different features, different benefits, and details
of various credit cards. Find, compare, and read reviews before you decide. You wouldn't buy a car without comparing
details or benefits, and you never buy a house without looking at several first. Just apply these same principles to credit
cards.
Credit cards are convenient for customers and can be beneficial if
used correctly. They are the perfect way to finance larger purchases while earning points for the things you buy everyday.
Just shop around first, and get the right credit card for you.
For more info on credit and debt please visit http://www.best-creditcards.info
one to choose. Let's break a few of them down to make the choice a
whole lot easier.
The question is which credit cards are right for you. Not all
credit cards are the same. Some have a fixed rate,which simply means the APR doesn't change, or at least not that often.
Most credit cards are open lines of credit, that you can use to make purchases. Most of them are unsecured, while a few
are secured or prepaid. Prepaid credit cards are offered by a lot of major companies and act some what like a debit
card, because you will need to open an account and your credit card will be funded by this account. These are great for people
starting out with little or no credit or rebuilding credit. Low interest rate cards, are ideal for people with good credit
that would like to take advantage of reduced interest rates. Some credit cards have an annual fee, while others do
not. Some earn reward points. Store credit cards work similarly to regular credit cards, except there is no annual fee,
and the card is only good for purchases at that particular store. These store cards are also effective at rebuilding
credit.
You would be surprised at the number of people who don't bother to
compare credit cards before applying for them. You should compare the different features, different benefits, and details
of various credit cards. Find, compare, and read reviews before you decide. You wouldn't buy a car without comparing
details or benefits, and you never buy a house without looking at several first. Just apply these same principles to credit
cards.
Credit cards are convenient for customers and can be beneficial if
used correctly. They are the perfect way to finance larger purchases while earning points for the things you buy everyday.
Just shop around first, and get the right credit card for you.
For more info on credit and debt please visit http://www.best-creditcards.info
Saturday, May 5, 2007
CLEAR UP THAT CREDIT REPORT EASY BY PAT WOOD
It's time to clean up your credit report, but first you have to get a copy of it. You can get a copy if you were denied credit by a company that you applied to. You can also request free copies of your credit report once a year, and the easiest way to do that is with that great little invention called the internet. In less than 5 minutes you will have that report right in front of you to review. Print it out and let's begin. Go to: http://www.equifax.com/
http://www.experian.com/
http://www.transunion.com/
Start by circling whatever you feel is in error or inaccurate. Info that is inaccurate can be disputed with the creditor or the credit reporting agency. Dispute with the agency based on whatever report contained the error. Once the dispute is filed, the agency will begin the investigation by contacting your creditor. The whole process takes about 30 days, and if the error you disputed is in fact an error, your credit report will be updated. If you have the same errors on all three reports, you will have to contact each agency separately. There is no charge for disputing errors. Also if there is really old info on the report, try to get that removed.
Some people may have gone thru some hard times and were late on payments to a certain creditor. They might have lost their job or had medical problems. In this case they could add a personal statement to each of their reports. The personal statement should be 100 words or less telling why they were late and for what reason. Anyone who pulls the report will also see this statement of explanation.
If some payments to creditors have been consistently late, call those creditors, maybe another payment plan can be implemented that will allow you to be on time with your payments. Also most people don't know that if they fail to pay a doctor or medical bill, or some utility, cable or phone service bill and it ends up in a collection agencie's lap, they can also report to the credit bureau. So keep an eye out for these on your report and negotiate with them as well.
Many creditors are understanding of financial difficulties and are willing to help. In negotiations you could ask for a payment plan with no extra interest or a lower rate of interest. You could ask for late fees to be waived, you could ask for a loan extension, or maybe even a lower balance due on the loan. If something is agreed upon, get it in writing and ask them how this will effect your credit report in the future.
These steps will slowly but surely remedy the situation and build you a better credit report. If you're looking to buy a house in the future, get copies of your report now, and start clearing them up, This could essentially help later on with the mortgage process and getting a good interest rate on other credit as well.
While clearing up these reports and negotiating with creditors you will learn from any past credit mistakes and avoid problems in the future. Get those free reports annually and keep tabs on them.
For more info and tips on credit and debt please visit, http://www.best-creditcards.info/
http://www.experian.com/
http://www.transunion.com/
Start by circling whatever you feel is in error or inaccurate. Info that is inaccurate can be disputed with the creditor or the credit reporting agency. Dispute with the agency based on whatever report contained the error. Once the dispute is filed, the agency will begin the investigation by contacting your creditor. The whole process takes about 30 days, and if the error you disputed is in fact an error, your credit report will be updated. If you have the same errors on all three reports, you will have to contact each agency separately. There is no charge for disputing errors. Also if there is really old info on the report, try to get that removed.
Some people may have gone thru some hard times and were late on payments to a certain creditor. They might have lost their job or had medical problems. In this case they could add a personal statement to each of their reports. The personal statement should be 100 words or less telling why they were late and for what reason. Anyone who pulls the report will also see this statement of explanation.
If some payments to creditors have been consistently late, call those creditors, maybe another payment plan can be implemented that will allow you to be on time with your payments. Also most people don't know that if they fail to pay a doctor or medical bill, or some utility, cable or phone service bill and it ends up in a collection agencie's lap, they can also report to the credit bureau. So keep an eye out for these on your report and negotiate with them as well.
Many creditors are understanding of financial difficulties and are willing to help. In negotiations you could ask for a payment plan with no extra interest or a lower rate of interest. You could ask for late fees to be waived, you could ask for a loan extension, or maybe even a lower balance due on the loan. If something is agreed upon, get it in writing and ask them how this will effect your credit report in the future.
These steps will slowly but surely remedy the situation and build you a better credit report. If you're looking to buy a house in the future, get copies of your report now, and start clearing them up, This could essentially help later on with the mortgage process and getting a good interest rate on other credit as well.
While clearing up these reports and negotiating with creditors you will learn from any past credit mistakes and avoid problems in the future. Get those free reports annually and keep tabs on them.
For more info and tips on credit and debt please visit, http://www.best-creditcards.info/
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