Cash or credit

My professional life revolves around credit reports and cash. If I had to have one or the other when it comes time to buying a home I would choose for less cash and better credit. Your personal credit history is the first thing that I want to determine before I inform a client of their buying power. Good credit is extremely important. With no credit or poor credit you will be limited to the amount of cash you may borrow and to the type of mortgage you may get. Plus, with bad credit you will be required to pay an interest rate, which is much higher than what someone would pay with good credit.

There are three major credit bureaus that monitor your personal credit history. TransUnion, Experian and Equifax are those bureaus. These three companies are for profit companies and they are the depository of information as supplied to them by companies that you have credit. As an example, if you have a car loan, the lender may report to one, two or all three bureaus on a monthly basis. If you pay on time each month that action will help your credit history, if you are late, even once, it will show up as a negative on your credit report.

Each credit bureau has its own scoring system. They take the credit information that is supplied from the credit card companies, home mortgage lenders, student loan companies, vehicle lender and so on and they come up with a three digit score. The higher your score the better.

Your goal should be to have scores in the mid seven hundreds and with limited credit lines. Keep in mind that you do not need to have a dozen credit cards, two or three will do. The more open credit lines the bigger chance you have that one may be paid late. Keep in mind that one late payment on a mortgage in the past twelve months can reduce your credit scores as much as a bankruptcy.

Here is what I suggest you do to keep your high credit scores to improve your current credit scores. First off never ever pay your debts late. If you owe the bill pay it, even if you can only pay the minimum. Second I suggest you accelerate the payment on your higher interest rate credit cards. They cost you more each month so get rid of them as soon as possible.

The third thing to do is eliminate all but two or three low interest rate credit cards. Call the companies that have the higher interest rate and close the account. Even though you may have a balance on the card you can still close it for future use.



These are but a few things to do to keep your scores high or to improve them. Credit issued to you is based on your ability and willingness to repay that debt. Do not abuse it and it will not abuse you.



<I>For answers to your mortgage related questions call Bob Kieber at (970) 262-1199 or e-mail him at rkieber@comcast.net . Bob is a local mortgage lender and principal of Resort Lending. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country. </I>