The Credit Effect - What's Your Score?
It is common to assume that paying bills on time automatically means having a high credit score. Unfortunately, that's not always the case. There are many misperceptions about how scores are calculated -- and yours could be lower than you might expect.
Ignoring your credit score could be a costly mistake. As an example, let's say you bought a $400,000 house with a 30-year fixed-rate mortgage at a 6-percent interest rate. Over the term of the loan, you would pay interest charges of $463,354. If, however, you had a lower score and your bank bumped your interest rate up to 8 percent, you would pay interest charges of $656,619. That's a hefty difference of $193,265. Even a small credit score improvement can make a considerable difference in your overall cost of owning. There are many credit scoring systems available to lenders, but FICO scores are by far the most commonly used. Knowing how FICO scores are calculated can help you make better decisions about your credit. At a minimum, you should be aware of some of the most common misperceptions, for example: Credit reporting agencies tell you that you have the right to dispute inaccurate and/or false claims on your report and you do, but what they don't tell you is how it affects you in the future. This trend in "self-credit repair" leads you to believe that disputing accounts results in permanent removal of derogatory items. This has made disputing the most popular method used for repairing bad credit. Unfortunately, in most cases the removals are not permanent and cause more damage than good. The accounts often reappear in 3-6 months and if they have live debts tied to them, these debts will likely escalate or grow to be larger with interest. On top of this, the disputed account is then flagged leaving you in a high risk status. The high risk status may result in the inability to receive any form of lending no matter what your score is.
I have worked with and recommend, Robert A. Christopher & Associates, LLC. (952-314-7154). They are a local and reputable credit and debt consulting firm that works directly with your creditors instead of the via the ineffective dispute method to the bureaus. This firm will work on your behalf to get derogatory or inaccurate items removed permanently. They can also help you with live debts and the future reporting of those tradelines so that you leave with a permanent eliminate of debt and a legitimate credit score increase. Ask your real estate agent or mortgage lender to refer you to a credit specialist before you begin your house hunt. Today's buyers should not underestimate the value of a detailed credit review, the nominal cost will help you know where you stand, and may reveal some areas of improvement that could save you tens of thousands of dollars over the life of your loan. Check them out at: www.YourCreditLife.com and make sure you let them know that I sent you!
Provided by: Stephanie Danielson, Broker/Owner (CDPE Certified)
Acuity Group Real Estate Professionals
601 Main St. Elk River MN 55330
Stephanie Direct: 612-242-8747 or Stephanie@ACGproperty.com
Acuity Group Specializes in Traditional Buyer/Seller Transactions, Short Sales, REO Sales and Service, Investment Property Consulting and Management, Rentals and Property Management.
Traditional Listings, Buyer Representation, Short Sale Listing Experts, Certified Distressed Property Consultants & Specialists serving the following Minnesota Cities: Elk River MN, Zimmerman Minnesota, Big Lake MN, Rogers Minnesota, Otsego, MN, St. Michael Minnesota, Albertville MN, Princeton MN, Ramsey Minnesota, Anoka MN, Nowthen Minnesota, Monticello MN, Otsego MN, Oak Grove MN, Burns Township Minnesota, Champlin Minnesota, Dayton MN, Hassen Township Minnesota, Coon Rapids MN, Blaine Minnesota, Fridley MN, St. Francis Minnesota, Livonia Township MN, Andover MN, Becker Minnesota, Baldwin Township MN, Orrock Township, Minnetonka, Chanhassen, Chaska, Excelsior, Wayzata, Plymouth, Maple Grove, Golden Valley, St. Louis Park, Hopkins, Edina, Eden Prairie, Crystal, New Hope, Bloomington