Kieber: Have you checked your credit lately? (column)
Have you checked your credit lately? If you are like most people, the time that checking your credit comes to mind is when you are looking to buy a new home, new car or when applying for a new credit card to take advantage of the discounts available for new accounts.
As a longtime mortgage banker, I check my credit at least twice a year. In addition to running my credit often I do see the credit scores that credit card companies are now publishing on the monthly statements.
So what does the credit score represent and where am I compared to others? And most importantly what scores are mortgage lenders looking for?
The national average credit score is right around 680. The scores are based on algorithms that Equifax, Experian and TransUnion have derived to determine your credit history. And with these scores, mortgage lenders, car dealers and credit card companies can determine if you are worthy of being granted credit.
Ask yourself this: If someone you did not know came up to you and asked for a loan would you say, “Sure, here’s the money”? I bet you would ask for more information. I would ask for details on what they are buying, how much they are paying out of their own pocket and if they can afford to pay me back.
The same questions are asked by mortgage lenders, but with rules that are set to not discriminate and are fair for all quality borrowers. When I start the mortgage process I ask for two years of federal taxes, copies of pay stubs, bank statements and retirement account statements. Of course I then obtain a copy of the borrower’s credit report.
If the borrower has great scores, say 750 or higher, I take the file to the setup step. If the borrower has scores of less than 600 I inquire into why they have such low scores.
Thirty- and 60-day late payments on credit cards and car payments can make the scores take a nose dive. If the borrowers are looking for a new mortgage and have late payments on an existing mortgage a nose dive is a nice way of saying you have shot yourself in the foot. Getting a new mortgage will be much more difficult, if not impossible.
My recommendation to all that have car payments, credit card payments and especially mortgage payments: Make sure you pay them on time. When you use other people’s money they want their money and they want it on time.
Check your credit scores annually, if not more often. The higher the scores the easier your life will be when you need to ask for others’ money in the future.
Robert (Bob) Kieber is a long time resident of the Summit County and has been closing mortgages for over twenty years in Colorado and nationwide. If you have a questions Bob can be contacted at 970-485-1312 or e-mail him at rkieber@boeMortgage.com.
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