Credit scores are issued by three major credit bureaus (Experian, Equifax, and Transunion). Each uses a different method to determine a numerical credit score that reflects your credit worthiness. The greater the score, the better your credit worthiness. Certain activities will have a negative influence on your score and will potentially result in you getting denied for a mortgage. Below are tips for future Sicklerville New Jersey home buyers on credit behaviors that decrease your ranking.
Credit Behaviors That Decrease Your Ranking
Late Bill Payments
Late payments imply poor credit behavior and subsequently reduce your rating. The number of days you are late (30, 60, or 90+ days) and the number of recurrences also have an effect. Delinquencies remain on your credit profile for a very long time.
Collection Activity
If you are behind on payments and a loan provider has given up on their own efforts to obtain payments from you, they will likely assign your account to a collection agency. This appears on your credit profile. A payoff does not remove this from your report.
Creditor Charge-off
If a credit provider is unable to collect the total amount due to them, they may “charge-off” the the leftover amount. This could therefore occur if you entirely fail to pay or if you settle for a partial amount. Charge-offs appear on your credit report for seven years. New creditors will see this history and debate how likely you are to continue with this offense.
Publicly Recorded Activity
Bankruptcy, tax liens, judgments, foreclosures, and other legal events are entered into public record and to credit bureaus. Regardless of whether you pay off these debts, the initial recording continues to appear in your credit report. Certain items stay for up to 10 years and others (such as liens) will never be cleared. Therefore, it is beneficial not to let issues get this far.
Tips For Future Sicklerville New Jersey Home Buyers
All of the credit behaviors that decrease your ranking noted above make you a high-risk borrower and will either cause higher interest rates or completely prevent you from getting approved for loans. Practice good behavior and it will save you time, money, and heartache when it’s time to purchase real estate. These are the best tips for future Sicklerville New Jersey home buyers. Keep in mind that this includes only a few predominant credit mistakes. Consult a financial professional for information on your personal credit standing.
