What you don’t know about your credit will cost you | PostIndependent.com

What you don’t know about your credit will cost you

Linda McKinley
Glenwood Springs, CO Colorado
Linda McKinley

Effective April 1, 2009, your mortgage rate and closing costs will be determined by stricter credit score guidelines. Make no mistake, these adjustments will cost you big time if your score doesn’t measure up. Let’s look at some history.

Up until about 18 months ago, a credit score below 620 would qualify you for a mortgage loan. Although your rate was higher, you could still obtain a loan. Back then, a 680 credit score qualified you for just about any type of loan at a favorable rate.

Fast forward to the present. If your score is below 620 … good luck. That golden 680 credit score now needs to be 720.

Whether you’re renting an apartment, applying for a credit card, a mortgage or even insurance, your credit score will determine the interest rate or premium you are quoted. Basically, your credit score is the “filter” many providers use to determine if they want to do business with you, and at what price. Your credit score indicates your track record of how you honor (pay) your obligations

If you’re planning to buy a home or refinance your current mortgage, do your “home” work. Know your credit score before looking at houses. Correcting mistakes on your credit report can take time. You wouldn’t sign up to run a marathon today and expect to run tomorrow. You need to prepare. A poor or inaccurate credit history can take months to repair and correct. It is estimated that more than 90 percent of all credit reports contain some type of error. Be proactive with your credit. Will you make life happen? Or will you sit back and let life happen to you?

Many believe their credit is just fine. They pay their bills on time and have never had a problem. They’re shocked when they learn their credit score doesn’t measure up. Could any of these issues relate to you?

– The court ordered by ex to make that car payment. Why is the late payment showing on my credit report?

– I co-signed for my child’s student loan. The loan payments aren’t even due yet. Why is a late payment showing on my credit report?

– I never received a statement from that doctor. I have full insurance. Why was that $20 balance sent to a collection agency?

– I paid that collection two years ago! Why is it showing upon on my report?

– I pay off my credit card every month. Why does my report show a balance and why does that lower my score?

– I enrolled in a consumer credit counseling service to get out of debt. I paid on time every month. Why does my report show I was late each month?

These are real issues on credit reports that we encounter on a regular basis. Although we can remedy many of the problems, it takes time.

Monitor your credit twice a year. You can obtain a free credit report or subscribe to a paid credit alert service that will send you an email when changes to your credit occur. The free credit report can be accessed at http://www.annualcreditreport.com. The paid credit alert service can be accessed at http://www.MyFICO.com.

For a free 20-page booklet titled “Understanding your FICO Score,” contact info@lindamckinley.com.

Linda McKinley is a licensed mortgage broker with Cherry Creek Mortgage Co. in Glenwood Springs. She can be reached at Linda@lindamckinley.com.

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