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2019 Idaho Real Estate Blog

Mythbusters -- Credit Traps To Avoid Main Boise Home Loans
Even the most credit conscious consumers make mistakes while managing their credit profile with credit scoring in mind. Here are some of the most powerful myths with regard to credit.

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Dear BuildIdaho.com reader:

Here are some of the more popular myths that I have seen and heard from my mortgage customers regarding people's perception of "how to keep a good credit score." Let's call this article, "Mythbusting...credit scoring style."
 
Never Use Credit Cards
 
Although a cash/debit card approach to consuming can work in today's society, this approach completely ignores the fact that a significant portion of your credit score (30%) is derived from looking at your use of credit in the past.
 
Having High Credit Card Limits Hurts Your Score
 
The amount of your credit limit does not matter at all to the credit scoring system. What does matter is the ratio of the balance you owe to the credit limit.
 
You Must Have A Balance On A Credit Card To Build Credit
 
As long as you are using and keeping your credit cards active, they will be rated and used by the credit scoring systems. As we have talked about earlier, having a balance equal to less than 30% of the available credit is ALWAYS the best position to keep for the best credit score.
 
Closing Credit Card Accounts Will Help Your Score
 
DO NOT do this ever...unless you are closing a joint account after divorce or you are the victim of identity theft. 45% of your score will be negatively impacted by closing credit card accounts. It simply cannot be justified unless you are divorcing or are a victim of identity theft.
 
Using my Debit Card Will Help Build My Credit
 
Many of my customers think that because their debit card carries the Visa/Mastercard symbol, that purchasing with a debit card will help build credit. This is not true.
 
A Divorce Decree Protects Your Credit
 
This is not true...your agreement with the creditor will always take precedence over a divorce decree. If you are a joint owner of debt, you are also responsible for the debt, regardless of what a judge says.
 

There are many more myths of credit scoring out there, but I tried to hit the questions and scenarios that I see most often as a Mortgage Consultant and Loan Originator.

If you are interested in talking more about this post or a specific credit scoring issue you have or know about, feel free to call me at (208) 880-0316, or email me at eric@ericsloans.com. You can also visit my website at http://www.ericsloans.com.

Regards,


Eric Leigh, Mortgage Consultant
2965 E. Tarpon Drive, Ste. 150
Meridian, ID 83642
(208) 880-0316
http://www.ericsloans.com
eric@ericsloans.com
 
Posted by Eric Leigh at 9/22/2009 9:07:00 PM
Comments (5)
Re:Mythbusters -- Credit Traps To Avoid
Eric

Can we still rent our credit to others for cash
Posted by on 9/23/2009 12:53 PM
Re:Mythbusters -- Credit Traps To Avoid
Also, can we still get walk away loans if we have perfect credit and good income? 0 down 125 LTV
Posted by on 9/23/2009 12:55 PM
Re:Mythbusters -- Credit Traps To Avoid
Emdeplam,

Seriously? No and No...

Eric
Posted by Eric Leigh on 9/23/2009 1:13 PM
Re:Mythbusters -- Credit Traps To Avoid
I remember reading about credit renting services...I have little use for my rating now so why not put it to good use...

As for the Walk Away Loan I just feel like I missed the party. I am hearing folks are getting to stay in their homes for up to 2 years post foreclosure...and I am quite sure I could tie things up longer contesting standing when more mortgage has been diced into hundreds of tranches.

All good credit does for me now is make me feel like a sucker. ;-)
Posted by on 9/23/2009 1:33 PM
Re:Mythbusters -- Credit Traps To Avoid
I hear that the ability for builders, developers and home owners to walk away is not as easy as it used to be. It turns out banks don't like losing money.
Trey
Posted by on 9/24/2009 7:31 AM
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