When was the last time you checked to see what kind of credit score 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 world of “identities and qualifications,” credit ratings and your personal credit score is the number one system priority of what counts when you are being checked and evaluated for a number of things, such as employment, loans, all types of insurance, including home, auto, and medical, tenant applications, co-op board approval for buying an apartment, and obtaining a mortgage, just to name a few. Your credit score and credit history are the top priority across the board for all lenders when assessing the risk of extending your credit or evaluating your track record of financial responsibility.
Even business owners, when dealing with new accounts or businesses, must depend on their credit scores for acceptance in whatever new business venture they are contemplating, and vice versa, using the credit scoring system to decide who they wish to do business with.
Many people don’t even think twice about their credit scores until a situation arises and 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 available for a mortgage they were trying to achieve.
Usually by the time someone finds out a problem exists on their credit report, it’s already too late to correct the problem that came up in time to help with 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 several months, their credit scores are good. Uh-oh! Credit bureaus not only take into account whether or not you pay your bills, they also look into whether or not you pay your bills on time.
On time means either paying the minimum amount or the complete amount (depending on what type of account) within 30 days of receipt of 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 you go beyond a 60-day or a 90-day period, your score is seriously demoted. And by the way, guys, this stays on your credit report anywhere from five to seven years!
“Inquiries,” which is a category on the credit report, also affects your score. It 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 causes a reduction on your scoring.
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 on that home, it is important to also be mindful of what kind of score you have on your credit report, since a good score (over 720) always gets you the best rates at the best and easiest terms of whatever is out there on the market.
This is not to say that if you do not have a credit score over 720 that you will not be able to obtain credit or a mortgage. There are plenty of products of all kinds out there for everybody, but if you’re striving to get the best value for your dollar and you are careful to pay your bills on time, the best deals on the market will be out there waiting for you. n
Anessa Cohen lives in Cedarhurst and is a Licensed Real Estate Broker (Anessa V Cohen Realty with over 20 years of experience offering full service residential, commercial and management real estate services. She can be reached at 516-569-5007 or Readers are encouraged to send any questions or scenarios by email to anessa@avcrealty.com.