Variety of Credit

Having a good variety of credit can actually increase credit scores. As a consumer, if we were going to hire a caterer would we prefer to hire someone with years of experience or the new kid on the block? Usually the answer to that question is the one with more experience. Why choose a professional with experience to manage the food at our event? The more experience a professional has the more likely they will provide better service.

This same philosophy applies to consumers with a variety of credit. Lenders want to know that the consumer they extend credit to will be able to pay it back in a timely fashion. When a consumer shows they can do well at managing many accounts of various types, over a period of time, they would be a lower risk than someone with limited credit.

How would a lender know if a consumer could handle managing many accounts if there is no history they ever did? Since statistics show that those with limited credit are at much greater risk for defaulting on a loan, the Fico score gives the consumer with a better variety extra points. This is why a consumer with a car loan, a mortgage, a few credit cards, and a student loan might very well be a better risk than someone with one credit card.

Remember, if a consumer has one account and is about to apply for a loan, runs out and opens three credit cards a month before applying, it will not immediately boost the credit scores. In most cases the situation will drop the credit scores since new credit hurts credit scores until it becomes seasoned. Consumers should prepare well in advance by building a variety of credit before applying for a loan.

With higher credit scores consumers can save hundreds of thousands of dollars over the life of the mortgage loan.


If you have any questions or need feedback on a credit report, email me at tracy@northshoreadvisory.com.

Visit our website for more information www.northshoreadvisory.com, and for more credit tips become a fan of North Shore Advisory, Inc. on facebook and follow @tracybecker on twitter.

Installment Credit

Since credit scores have such a great impact on the success of a purchase or refinance it is essential to understand how they work.

As I have previously mentioned in past posts, there are different kinds of credit—-revolving, installment, mortgages, and public records. Today I am going to talk a little bit about installment credit. This can include auto loans and leases or student loans, for example. The balance to limit ratio, although it hurts when high, does not impact the score as much as revolving credit. This is due to the nature of how the payments are set; consumers don’t decide how much they will pay monthly, but only if they will pay on time. They are not in control of making all the decisions; therefore, this type of credit is not weighted as heavily on the score when it comes to balance to limit ratios.

Remember, making sure credit is analyzed with future goals in mind is a MUST before taking an action that can foil those plans and limit a consumers options for a better quality financial life.

Follow me @tracybecker for more tips and visit www.northshoreadvisory.com for more information on how to improve your credit.

Credit Question—Driving Record and Credit

Q: I recently attended a Driver’s Ed course, and the instructor mentioned that your driving records could affect your credit. Is this true, and if so, how much does it affect it?

A: It is true that your driving record can affect your credit scores. Usually it happens when you do not pay your tickets or other driving-related penalties.

For example, let’s say that you receive a citation for one of those photo tickets in another state and you choose not to pay it. After a period of time, the state will turn it over to a collection agency, who will then try to collect the debt from you. The agency adds a late fee, plus interest, and slaps a $100 collection fee onto your credit report. If your Fico scores were a 780, they could drop down 100 points to a 680.

Because scores decrease differently depending on what score you begin with before a derogatory is applied, it is hard to say exactly how much your score will be affected by the derogatory without knowing exactly what your current credit and scores look like. If you have a 620 Fico score, the drop will be less, since you are already a higher-risk-borrower with low credit scores. A 780 credit score is excellent, which is why it has to drop so much lower once a delinquency is reported. Studies show that consumers with even one new late payment pose a much higher risk of defaulting, and therefore the score must drop to reflect this.

There are cases where judgments are placed on credit for tickets or other penalties associated with driving. When a collection agency has no success collecting, the debt will eventually go to judgment and be updated on your credit in the public record section. These judgments will have a great effect on credit scores as well. If you would like us to review your credit and give you some feedback, feel free to send us a current copy of your report and scores. You can buy them at http://www.myfico.com. Our contact info is on our website, where you can learn more about credit and our company http://www.northshoreadvisory.com.

North Shore Advisory Inc

If you have been following this blog, following me on twitter (@tracybecker), listening to me on the radio (Eye on Real Estate WOR710 AM), or reading my newsletters on my website (northshoreadvisory.com), then you are well aware of how much I emphasize the importance of credit and credit scores in today’s economy. But the right score could not only save consumers thousands, if not millions of dollars over the life of a mortgage, it could also dramatically effect/change the quality of life for an individual or family.

For example, a higher score could buy a consumer a larger mortgage. This could allow a family to live in a better area with a higher rated school district, providing a child with a better education and more options for future success. Unfortunately, many consumers do not realize the power of credit and scores until they are denied financing or told they will have to spend thousands more on monthly mortgage payments.

This is the point where they are playing catch up and companies like ours (www.northshoreadvisory.com) are called in to help address lower scores. In the majority of these cases we are successful at increasing credit scores by hundreds of points or just getting consumers to the goal they have in mind. I am going to share a few specific case studies in the next upcoming posts, but before I give you a view into how low scores have hurt certain people or how high scores have helped others (which is what you already know), I wanted to share what you might not know about us at North Shore Advisory by sharing our testimonial page:

Check Out More at (http://northshoreadvisory.com/testimonials.html)


“I had been trying to have an erroneous report against my credit erased for 5 years on my own. Once I engaged North Shore Advisory, they had it removed in two weeks. They are a no-nonsense professional company to deal with who get results!”
BW

“I sleep better at night thanks to you and your staff. I want to say a “Big Thank You” for the way you handled my debt problem. I hope I never get into that kind of a predicament again and if I know anyone who is, I will definitely refer them to the “BEST”!”
Marie

“…North Shore Advisory did for me what I was unable to do in 10 years…The entire process, from credit restoration to completing my mortgage application process took less than 8 weeks. I was approved!!!! My interest rate on my mortgage was 5.0%; initially it would have been a 6.5%. I still cannot believe what I have been able to accomplish, from where I was to where I am now. I am thrilled to report that I closed on my house in March and am now a home owner. I even qualified for an American Express and Discover credit card. I never thought it was possible. Many thanks to my seller who took a chance and believed in me and the expert help of North Shore Advisory Credit Restoration; you made my dream come true.”
Magaly Hicks