Your Credit and Changes to Credit

Dated: 10/30/2018

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Monitoring your credit report and credit rating is important, especially if you’re considering purchasing a home. Here are some tips for improving your credit. It’s not about quick fixes, but responsibility on managing your credit over time.

improving your credit1. Get a credit card: OK, this may seem counterintuitive, but let me explain. When used correctly, a credit card can be an effective tool for building credit. Charge a few budget-conscious purchases each month and pay the balance 98% of the balance every money. Yes having as little as $20.00 balance will help your credit core. It’s a game of sorts.</p?

2. Keep your balance low: This is the other side of the coin with credit cards. Try to only charge for items you could pay for out-of-pocket and try to stick to a balance of only 10 percent of your credit limit.

3. Leave paid debts on your report: Paid off debts like car loans show that you have a history of paying your debt on time.

4. Ask! If you’re looking to pay off a debt quickly, it can’t hurt to ask the lender to lower your interest rate. You can’t get what you don’t ask for!

Changes to Credit Scores in 2019

Fair Issac Corp, aka FICO, is going to be making a change in how credit scores are calculated by including the management of checking and savings accounts. This could help thousand of borrowers but raises the question on privacy.

Beginning in 2019, with customer’s permission, the new credit system will score the length of time checking and savings accounts have been open, frequency of activity and how much in savings via electronically by Finicity.

improving credit scoreThis could help target a pool of borrowers that are tapped out of the system and create another avenue of identifying more creditworthy borrowers. For who? The Lender.It could be a game changer for the real estate market. Imagine you have never been late on your debits, but only have one or a few credit cards that is rarely used, could see their creditworthiness increase to a level that the they can purchase a home with no down payment with interest rates comparable to borrowers putting over 20% down payments.

Lenders are eager for new borrowers, including people who don't have high scores but still pay their bills on time, as interest rates continue to rise. But there's an element or risk for lenders, said Jonathan Glowacki, a principal at consulting firm Milliman.

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Manny Caballero

Husband | Father | Author | Associate Real Estate Broker, CSSPE | Valley-wide 23 years | Soccer Coach....

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