Today’s blog post is the first in a series we will be bringing you from our guest experts. Today’s expert is Manny Moumdjian. He is the CEO of EZ Choice Financial Corp. and has helped many people build their credit in order to assist them with the purchase of a home. If you want to contact Manny to see how he can help you, the website is http://ezchoicefinancial.com/ or call (888) 349-6690for a FREE consultation.
- DO NOT APPLY FOR NEW CREDIT OF ANY KIND: Especially those preapproved credit card invitations you receive in the mail. Every time that you have your credit pulled by a potential creditor or lender, you will lose points from your credit score immediately. Depending on the items in your current credit report, you could lose anywhere from 1-25 points for one hard inquiry. Also the realtor or lender that sent you wanted to make sure you didn’t keep running your credit and lowering your score even more (which could stop you from qualifying). The lower your credit scores the tougher it is for you to qualify.
- DO NOT PAY OFF COLLECTIONS OR CHARGE OFFS DURING THE LOAN PROCESS: Paying for collections or charge offs will lower your credit score’s immediately due to renewing the date of last activity. (Basically bringing and old account back to life and allowing it to fall off 7 more years from the date the account was paid. If you want to pay off old accounts, make sure you go through our credit management process first, so we can determine the legitimacy of those accounts and also save you lots of money in negotiations and providing letters of satisfaction in full or deletions when complete.
- DO NOT CLOSE YOUR CREDIT CARD ACCOUNTS: The reason for this is: Credit card accounts are revolving accounts and they raise the revolving availability on your credit reports. The higher the limits available, the higher your credit score potential. There are other factors that also help increase your credit scores such as the length of the credit card history and the balances on the accounts. If you close the accounts, you will lose the revolving available credit as well as the length of credit card history on that account. That would really affect your credit profile and lower your scores.
- DO NOT MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS: Maxing out your credit cards or going over the limit triggers the credit bureaus to drop your credit scores anywhere from 25 – 100 points immediately. Some credit card companies will increase the interest rate on the credit cards if this happens. Always read the fine print on the Credit card agreements before you apply. I write this because some credit card companies will charge a penalty for reaching the limit or going over the limit. 2 very important things to remember on credit cards are: 1. Try to keep your credit card balances below 30% of their available limit at all times during or before any loan process. This will ensure that you maximize your scoring potential and possibly qualify for the lowest available interest rates. 2. You never want to be late on your credit cards because you will trigger a drop in your credit scores anywhere from 25 – 50 points and also trigger the universal default clause that might be in the credit card agreement you didn’t see, that allows credit card companies to increase your interest rates to the max allowed if you are late with any other company. If you decide to bring down the credit card balances, call the creditors first and ask for a credit line increase based on your payment history only, this way they might not have to run your credit. Therefore you won’t affect your credit rating with another inquiry. Also by calling the creditors, you might be able to increase your credit limits and bring down the debt to limit ratio getting you closer to the 30% mark.
- DO NOT ATTEMPT TO CLEAR UP CREDIT ISSUES ON YOUR OWN: We say this because it seems like it would be the smart thing to do to save money and not get taken advantage of by some credit repair company that wasn’t reliable! However, if you were recommended or referred to a company to help you with your credit situation, you can definitely be assured that they trust who they’re sending you to, especially because the person that sent you has already used the service before. When you attempt to fix your own credit and you don’t have a clue of what you’re doing, you might have created a bigger problem for yourself then you already had. Disputing is one thing but understanding what you’re disputing is another thing. What I mean by this is, knowing what you’re looking for versus just saying anything off the top of your head on your dispute is really the key. Saying things that aren’t true won’t fly with the credit bureaus. To ensure that all your questions are answered, as a professional we will give you or your clients a free consultation and let you know what you’re up against before you make a decision