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                          Trick or Treat?

  In our last blog I promised to give you a horror story and in the Halloween spirit, I will. First, I just want to take a minute to give some “treats” on how to maintain good credit and some things the credit bureaus (Experian, TransUnion, and Equifax) look for when scoring your credit. These are in no particular order of importance.

1. Do not close your open lines of credit (meaning credit cards, etc). The credit bureaus want to see that you can “manage” your debts. They want you to have open trade lines; in fact it is a good idea generally to have three good open lines of credit. So what does “manage” my credit mean? Simply this, try to keep your balances low (do not “max out your cards”), pay your bills on time, and maintain the line of credit for an extended period of time. Approximately 35% of your score is based on payment history.

2. Do not open a lot of new accounts too rapidly. Maintaining good credit can be easy but it takes time. So try to space your accounts out over an extended period of time. A bunch of new accounts too rapidly may raise suspicion and lower your average account age, which may actually have a negative effect on your score. Open new accounts responsibly and pay the balance due each month on time and this will raise you score in the long term.

3. Review your credit at least once a year and especially before making a large purchase like a home or a car. Keep yourself informed so that when you are ready to make that big purchase there won’t be any surprises. There are several resources for obtaining your credit report, in fact, right here on our website, if you go to the FREE TIPS drop down menu and click on the CREDIT SCORE GUIDELINES tab you can find how to pull your own credit report right at home. Remember, you determine how “good” or “bad” your own specific situation will be. Keep on top of it.

Ok, now for my quick personal horror story that pertains to why checking your credit is so important. I make sure to pay my house bill on time every month. Well, a couple of weeks ago I received a letter stating that my house payment was thirty days late. Then another letter stating I hadn’t made a payment in two months. Of course I thought this was absurd but it was a serious problem that needed fixing ASAP. I found out that someone in the receiving department of the lender lost track. But I still had to provide bank statements showing on time payments for the last four months. Now, my credit had been affected because when you are 30+ days late on a mortgage payment (whether it’s your fault or not) it gets reported and immediately begins to hurt your credit.

So here is the important part - I wrote a letter to the lender stating I wanted them to inform all three credit bureaus that I have not had late mortgage payments and needed proof that this gets taken off my report.  If I had not taken this step my credit could have been ruined for a lengthy period of time.

It is so important that you keep up with your credit like I had to do, because even if it’s not your fault, things can go wrong. Credit can spiral downward quickly and you must take the initiative to get it fixed. If you don’t, no one will, and you will receive a “trick” instead of a “treat” the next time you want to make a major purchase.