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Being Credit Wise

Your credit score is one of the most valuable things you own and it can quickly turn into a nightmare for you. A low credit score will directly affect your ability to borrow money and may get you turned down for that mortgage loan you have applied for. Or, you may be offered a higher interest rate because the lender sees you as a risky borrower. This may prevent you from buying your Waterbury or Stowe, Vermont dream home!
 
Many people either don't understand the ins and outs of their credit score, or they have inaccurate information on the subject. If you are currently looking for real estate, you should prepare yourself ahead of time and work to increase your credit score. Hopefully, this will enlighten you! 
 

1. Credit reports aren't always accurate. Most have a big error or mistake: 80 percent, actually. Regularly check your credit report. Every day we hear about thousands of credit cards being compromised through the hacking of large retailers' security and payment systems. These breaches can ruin your credit and be a large and seemingly endless headache for you. 

If your personal information gets compromised, a thief will open up financial accounts in your name. However, they will not pay the bills, and this will ruin your credit. Those unpaid bills will be reported to the credit agencies and will affect your ability to buy a car, rent a nice place, purchase a home or even get employment. So keep a close eye on your credit scores and your credit card accounts and report suspicious charges and credit cards immediately.
 
2. Pulling your credit score may lower it. A "soft" pull is done yourself for personal reasons; it will have zero effect. A "hard inquiry" is when a lender pulls it up for loan approval. It will have a negative impact, but small.
 
3. A higher income does not equal a higher credit score. Income is not relevant to credit score; paying bills on time (or not) is what matters.
 
4. Credit scores and credit reports are not the same. Credit reports are just one piece of the equation. Many factors go into calculating your credit score. What matters is your credit managing skills and making sure all three large credit bureaus have similar information and scores. The three big credit reporting agencies are Equifax, Experian, and Transunion, and you can get one free credit report a year from each. Take advantage of this to protect yourself.
 
5. Debt settlement will not remove debt from your credit report. Debt settlement doesn't fix bad credit. Late payments, bad information, and other smears remain for up to seven years following the first "infraction" date.
 
6. Cash-only payments will not help you build credit. You can't build good credit unless you use credit, and use it wisely. Get a couple small loans or credit cards and pay them off as you use them.
 
7. Closing your credit card accounts will not improve your credit score. Closing a card lowers your amount of disposable income: the ability to pay off other debt. You don't want to lower "credit utilization" by closing out a card.
 
8. Smart management of your various banking accounts is not reflected in your credit score. These are not reported to credit bureaus and thus have no impact. But hopefully, your smart management means you are paying your bills on time!
 
9. Dispute inaccurate information to remove it from your credit report. You can dispute only mistakes. A valid dispute will result in deletion of inaccurate information. A dispute of negative, but accurate, information will be a waste of time.
 
10. Missed payments will affect your credit score. Any missed or late payment can be reported to a credit bureau and probably will be.
 
Based on an article By Robert Siciliano
Real Estate Services with IDTheftSecurity.com Inc

 

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