I Have a Suggestion…

I Have a Suggestion…

  Glad you’re back! Last time we talked, I promised to offer a suggestion for managing your credit accounts.

The right thing to do is to keep long standing accounts open even though you don’t use them any longer. My suggestion is to charge a small amount every few years and when the bill comes in, pay it off entirely. This will keep the account active so the creditor doesn’t decide to close it for you for non-activity. In a few instances, I’ve instructed borrowers who have closed accounts right before getting their loan to re-activate them immediately, after ensuring that the creditor will re-establish the history. If the creditor won’t re-establish credit history, then I recommend leaving the account closed because beneficial credit history has already been lost. Accounts that are in the open section of your credit report will have the most positive effect on your score, especially if they have a very small balance to limit ratio. Once the account moves into the closed section of a credit report, the history is lost. History makes up a big portion of your overall credit score. Visit www.southernoaksmortgage.com

Here’s the Answer I Promised

Here’s the Answer I Promised

Last time I posted about how you might assume that your score would improve since you now have eliminated an account that you could have, in an instant, borrowed against entirely.

I promised an answer. As I said, the reality is different and is two-fold…

 First, if this account has been established for many years, let’s use 15 years as an example, and you rarely use it, you would have 15 years of good credit with limited usage. This works in your favor because you’ve got an established account with a long history of good credit. Second, if you have a high credit limit and don’t use this credit, you’ve shown that you have willpower and can refrain from using credit even though it’s staring you right in the face.

 Thus, the right thing to do is to keep long standing accounts open even though you don’t use them any longer. I have a suggestion. Stay tuned to my next post!

Visit my website and let’s get to know each other! www.southernoaksmortgage.com

Closing Credit Accounts

Closing Credit Accounts 

Assumptions can cost you dollars and time when you’re in the market for a loan. There are deadly mistakes you want to avoid! Some of them include your credit accounts. Listen closely…

It would seem logical that if you have many open trade lines with moderate to high credit limits, closing some of them would improve your score. The theory is that since you have no use for this card or credit line, why keep the account? It seems to make sense to close it. One would assume that your score would improve since you now have eliminated an account that you could have, in an instant, borrowed against entirely. Well, the reality is different and is two-fold.

There is a huge misperception that exists regarding the closing of existing credit accounts in an effort to improve credit scores. Check my next post to discover what it is, or email me directly at jeff@somloans.com Trust me, you want to know this if you’re trying to get a loan!

Inquiries on Your Credit Could Lower Your Score

Inquiries on Your Credit Could Lower Your Score

Are you ready to buy? Look for the right loan. Opening more accounts just prior to getting your loan, which will result in inquiries on your credit and could lower your score, would not be a good move. But if you don’t have enough credit to qualify, a good suggestion would be to start building credit now so that you’ll be able to qualify at a later date. Knowing this in advance, especially two years in advance, could really make a difference. However, please make sure that you consult with your mortgage professional before applying for too many cards to ensure that you are improving your credit score and not hurting it. Be sure you have all of your bases covered! Email me jeff@somloans.com No obligation.

Jeff s 6 minute video, Episode #2

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http://www.youtube.com/watch?v=M8K9piZmXZ4

Come on! Build Your Credit Score

Come on! Build Your Credit Score

I often advise my clients who have a minimal credit history to open a couple more accounts to help build their credit scores. This does not mean, however, to abuse these cards. I generally suggest a department store charge card that they charge as little as $20 on, pay off in full at the end of the month and then put away for a while. The goal is for these accounts to build a 24 month history.

 The idea to build more credit is great in many circumstances, but can be dangerous in others. Want to know what they are? Drop me an email at jeff@somloans.com. It could change your future…