Thursday, April 25, 2013

5 Deadly Mistakes to Avoid When Looking for a New Home

5 Deadly Mistakes to Avoid When Looking for a New Home

By Daniel Sater C.C.E CFP
Nationally Recognized Credit Expert, Author, Speaker, and Credit Coach to the Credit Repair Industry

631-392-8685      ©2012 CREDIT SCORING ADVISOR

1)      Not Paying Down Credit Card Accounts with Balances in Advance of Applying for Credit

The credit scoring model takes 30 to 60 day to reflect what you do today and Mortgage lenders will no longer allow you to pay off credit cards to improve your debt to income ratios. This area accounts for approximately 30% of your credit score. I have seen more damage done in this area due to the consumer’s lack of knowledge. As you use more of your credit limit you lose more points from your score. Max out 5 or 6 credit cards and you may lose 80 to 125 points. Paying down your credit balances is one of the fastest ways to boost your scores. The best is to have your balances below 10% usage prior to applying for new credit or a big ticket item.

2)      Closing Accounts, or not Using Credit Card Accounts to Keep them Active.
According to Fair Isaac, the people who developed the FICO Scoring Model, ALL account reporting on your credit report are scored, OPEN OR CLOSED. There is little distinction between open and closed accounts. You NEVER get a scoring benefit by closing tradelines. Closing a tradeline will NEVER help your scores but can only lower your score. So will not using or having Credit Cards.

In addition to the effect on your debt to available credit ratio, you also run the risk of shortening your credit history. Over time, these closed accounts will drop from your report, eliminating a good account and reducing the number of accounts you have successfully had.

3)      Missing Payments

For some reason people get complacent when paying bills and don’t thinks one slip means that much. If your score is high, (>750) one missed payment will cost you 80 to 110 points. (Good News! If your score is already 550 you might lose on 10 to 20 points.) A rule of thumb, the more recent the more damage will be done. Also, the more severe (90 days late vs 30 days late) and/or the more frequent the lower your score. It doesn’t matter if it’s $10.00 of $10,000. If you have missed a payment, bring it current as soon as possible.

4)      Apply for New Credit of Any Kind.  Including those “You have been pre-approved” credit card invitations that you receive in the mail.  Every time that you have your credit pulled by a potential creditor or lender, you lose points from your credit score immediately.  Depending on the elements in your current credit report, you could lose anywhere from 2- 15 points for one hard inquiry. New Credit will also change your scores.

5)      PAYING OFF COLLECTIONS OR CHARGE OFFS during the process thinking they will be removed from your credit report or improve your score. IT WON’T HELP. This is where a Professional Credit Restoration firm with the knowledge and skills can help Boost your Scores. We average a 70% deletion record. Give us a call. 631-392-8685
Daniel Sater is a Nationally Recognized Credit Expert who founded Credit Scoring Advisor, a national credit repair company specializing in Rapid Credit Repair for their clients. In addition Dan trains and Coaches numerous Credit Repair Companies across the country, he is a Speaker and Author. He last book, "The Top 20 Toxic Credit Mistakes" is available on the Credit Scoring Advisor website. He can be reached at 631-392-8685.

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