So, What Does Your Credit Look Like?

So, when was the last time you guys checked to see what kind of credit scores you rated with the three credit bureaus (TRW, Equifax, and Experian)? For those of you who said “never,” we have a lot to discuss.

In today’s new world of “identities and qualifications,” credit ratings and how you score are in the top ten of what counts in checking and evaluating people for a variety of things, such as employment, all types of insurance, including home, auto, medical, tenant applications for apartments, co-op board approval for buying an apartment, and obtaining a mortgage to name but a few. Credit scoring has become the #1 system for assessing the risk of advancing your credit or just evaluating your track record of financial responsibility.

Even when considering doing business with a potential new account or business, it’s vital that businesspeople check their new associate’s credit score before accepting them into this new business venture. The same applies to insurance companies who check your credit report and credit score before offering you premium costs on insurance policies.

Many people don’t think twice about their credit scores until a situation arises where they find out there was a problem on their credit report that caused them either to lose out on a deal or to be penalized for the lowest interest rate for a mortgage they were trying to achieve. Usually by the time they find out about a problem on their credit report, it’s already too late to correct it for whatever financial transaction they were trying to attain.

Some people take for granted that as long as they eventually pay their bills, even if it takes a few months, that their credit scores are good. Uh oh! Credit bureaus not only take into account whether or not you paid a bill, but whether you paid it on time or not. On time means either paying the minimum amount or complete amount (depending on the type of account) within 30 days of receiving the bill. Each time a bill goes unpaid beyond a 30-day period, points are deducted from your credit score and a delinquency is posted. If they go beyond a 60-day period or 90-day period, your score is seriously demoted.

“Inquiries,” which is a category on the credit report that also affects your score, takes into consideration how many times within a 90-day period you allowed a lender of any kind (credit card, mortgage, automobile dealership, etc.) to pull a credit report for the purpose of obtaining new credit. If too many “pulls” within a short period of time are noted, this also causes some reduction on your score.

Just as you would sit down and calculate how much money you have to purchase a home and how much a mortgage would cost you in that home, it’s important to also be mindful of what kind of scoring you have on your credit report, since a good score (over 740) always gets you the best rates at the best and easiest terms of whatever is out there in the market.

This is not to say that if you do not have a credit score over 700 that you will not be able to obtain credit or a mortgage. There are plenty of products available out there for everybody, but if you’re striving to get the best value for your dollar and are careful about paying everything in a timely manner, the best deals available in the market are going to be waiting for you. n

Anessa Cohen lives in Cedarhurst and is a NYS Licensed Real Estate Broker (Anessa V Cohen Realty) with over 20 years of experience offering full service residential, management and commercial real estate services. She can be reached at 516-569-5007. Readers are encouraged to send any questions or scenarios by email to [email protected].