Credit scores are a mystery to many American consumers.
Even the most seasoned professionals are shocked to learn how easily their credit can be destroyed. In CREDIT SCORE POWER, author Tracy Becker offers insight into navigating the scoring system and focuses on how to help consumers keep their credit scores high.
With more than twenty years of experience in the industry, Becker gives a simple and clear view of what makes and breaks fantastic credit scores. CREDIT SCORE POWER discusses the following:
- The credit bureaus and what they do
- Credit scores and the credit score process
- Methods for shopping for a mortgage
- Financial distress
- The secret to having the best credit
- Credit monitoring and identity protection
Credit scores are an important aspect of consumers’ lives and can greatly affect the interest paid on loans and credit cards. The information presented by Becker helps people understand the system in order to have the best opportunity and highest savings in interest a credit score can offer.
The importance of having established active open trade lines years before getting a loan Times have changed and continue to change at a rapid pace. Four years ago it seemed the only requirement for a consumer to get a loan was a pulse. A year ago if you had an excellent Fico score 740-850, if the required income to debt ratio and appraisal came in at the right value, you were insured the best rates. Today there are more challenges that consumers must become aware of. Major Banks like Wells Fargo, Bank of America, Chase, and many more require OPEN, ACTIVE, AND SEASONED trade lines to be approved for a loan. No matter how high the income, Fico Scores, or the value of the home may be if the right amount of open and active trade lines are not on your credit profile you may very well be denied. With this in mind it is of great value to begin to build your credit, 2 to 3 years, in advance of thinking about getting a new mortgage or refinance. What does this mean? Active open trade lines are now a requirement for many mortgages. Here is an example: A consumer has one credit card that has been open and active for 6 months, one active new open Auto loan, a closed PC Richards account, and a closed 1 year old Bloomingdales card. This consumer Fico score is a 745. The loan being applied for is over $720,000. This consumer will be denied this mortgage from many banks. Why would this happen? Banks are now requiring more active, open, and seasoned accounts. What to understand about OPEN accounts. If consumers do not use their revolving credit (all credit that can be maxed out and only minimum payments are required) these accounts become INACTIVE and Grantors can close them if they choose too. Besides accounts being closed scores can drop up to 30 points for inactivity of credit. This means that revolving credit accounts must be used consistently to insure the best score benefit and continued use. What does SEASONED credit mean? Seasoned credit is all accounts that are opened for over 1 or 2 years. Some mortgages require a combination of 1 or 2 active and seasoned accounts that are a year or more old. This same type of loan may also ask for 2 more accounts that are 24 months old. Other loans may require 1 seasoned and active account. IT IS OF THE UTMOST IMPORTANCE TO SPEAK WITH YOUR MORTGAGE PROFESSIONAL WELL IN ADVANCE TO DETERMINE WHAT THE REQUIRMENT IS FOR THE LOAN YOU MAY NEED! Requirements vary depending on the amount of the mortgage, whether it is a conforming, non-conforming, jumbo, or FHA loan. Another factor to consider when preparing for a loan is the TIME REQUIREMENT needed to build good seasoned credit. When opening credit your score can be reduced by up to 60 points for a year. This also applies to closing credit. Putting yourself on as an authorized user with a relative's old and excellent credit card account may very well increase your credit score but it will not be viewed by the bank as your credit. This means that you must have the time to establish your open active accounts before applying for the loan. It can be very disappointing or mean the loss of a great investment opportunity at best. On the other side it could be losing the chance to save $1000's on mortgage payments when applying for a lower interest rate on a current mortgage. The point I am trying to make is to inform your friends and family NOW to contact a mortgage professional who can explain all the requirements for the exact loan they may be interested in. Why not learn today what is needed to make an easy successful mortgage approval tomorrow.
is the president of North Shore Advisory, Inc., a leader in the industry of credit education and restoration. She is known across the country for her expertise, and she and her staff have saved consumers millions by increasing their credit scores. Becker educates professionals countrywide with her cutting edge credit seminars. She currently lives in New York. Visit her company’s website at www.northshoreadvisory.com