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The holiday season is here! With that comes gift shopping which without care can lead to poor credit scores.

At this time of year we are all so used to hearing the same old song from the department store clerk singing the words, "If you open a store card today you will get an extra 30% off of your purchase". Well that sounds great but is it really? Let's take a look. Not only does opening a new credit card cause a third party credit review which can drops credit scores but it also impacts your average age of credit making it younger. Younger credit means higher risk and a drop in credit scores. If a mortgage applicant is at a 740 credit score and two new accounts are opened during Holiday shopping the 740 score could drop over 50 points. Depending on the loan amount the difference between a 740 credit score and a 690 credit score could be hundreds and thousands of dollars more over the life of a 30 year loan. It may also mean a rejection. To recover back to the original average age of credit could take years. Be sure to share this with your loan applicants or potential home buyers so they are aware before they start opening new credit cards.

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What are “consumer dispute statements” on credit reports? Can they increase/decrease credit scores and interfere with loan approval?

When an individual decides to review their credit and attempt to work on improving it they either challenge the validity of the credit history with the bureaus or directly with the creditor. This process may cause consumer dispute statements (CDS's) to appear on credit. Initially, when a negative account is disputed it will be taken out of the score formula or be calculated differently for a period. This change in calculation can cause increases in credit scores until verification by the creditor and the credit bureau is complete. The same applies to good accounts but scores can drop. When the initial verification is complete the account will be corrected or verified as accurate. If the consumer continues to dispute the account a notation that the consumer disagrees/disputes the account is placed on the credit report. This can continue to alter the score and removal is more complicated. Most loans will not be approved by a lender or will be kicked into manual underwriting if a CDS is pending or unresolved on credit. Most loan professionals (LP's) are aware that a CDS can inhibit their ability to get a loan closed but may not realize the reasoning behind it. Lenders want to price loans correctly with the true level of risk reflected. An accurate score prior to pricing and extending financing is of primary concern which is why these CDS's can be important. A quality credit repair company will explain this to LP's when changes to a client's credit are complete. They will also advise the LP when new reports can be pulled for credit score accuracy. By conferring with the LP they remove CDS's that can cause issues for approval and give the green light for all to advance forward with loan application. Unfortunately, there are many dispute factory type credit repair companies and even consumers that randomly dispute with no strategy into how these dispute notations will impact loan approval and successful timing of a closing.

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Building Diversified Credit Accounts on Credit Reports Can Increase Credit Scores & Costs of Loan Interest & Fees

Most credit scoring systems define our level of risk to a lender by reviewing both our payment patterns and our ability to manage credit. From the information gathered by the three major credit bureaus a score is then formulated for each bureau. Most mortgage lenders take the middle number of the three credit scores and it becomes the indicator of the borrowers risk level. The categories of accounts we can add that make up a credit score are Revolving, Installment, and Mortgages. Revolving credit account balances such as credit cards, overdraft on a checking account, and certain types of lines of credit have the most dynamic influence on scores. The closer the outstanding balance gets to the limit the more the scores can drop. Because this type of credit allows the borrower to decide how much they will charge (up to the limit) and what payment they will make (no less than the minimums) the lender has a clearer view of an individual’s ability to manage credit. Installment credit which can include student loans or car loans or leases has a set monthly payment and needs less decision making or management skill. This is also the case for most Mortgage credit. Therefore, high mortgage or installment debt ratios have less of an impact on credit scores than do revolving credit ratios. Mortgages are the hardest type of credit to qualify for and more points are added to scores once these types of loans become seasoned. Seasoned credit is over one or two years old. Age of credit is a factor used by the score formula and the older the average age of credit the better it is for credit scores. However, timing of applying for and opening new credit is key. Make sure you are opening new accounts years in advance of applying for a loan to give enough time for accounts to season and add points to scores. By opening many accounts in a short period of time scores can plummet due to reducing the average age of credit substantially. When building a new business, the first 5 years are critical to a firm’s success and usually there is little or no profit. Some businesses are able to get financing based on their receivables but this may be at a high cost. In most cases if the business owner has excellent personal and business credit they can get the necessary credit related financial tools at lower pricing. Of course if accounts are paid late or not paid at all credit scores will also drop dramatically. Collection accounts, late payments, and other delinquencies will reduce credit scores and outweigh positive credit building. Aside from this it can be of great value to have one of our credit experts review any credit report challenges you come across. Getting the right feedback or help can be essential to the success of loan approval as well as good customer service. We are always available and well equipped to give individuals/business owners insight into what strategy would deliver the highest credit scores.

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How Your Credit Score May Raise the Premium on Homeowner Insurance

We all know that banks review credit scores when making lending decisions to evaluate the risk of default on a loan. But, surprisingly, there is also a strong emphasis on credit score investigation when determining insurance rates. If you’re a homeowner, your credit score plays a large role in pricing your premium. The lower the score, the higher the risk you’ll file a claim for a loss, hence why they feel you should pay more. Based on reporting from six major insurers that represent 60% of the market in each state, the condition of your credit score will lower or raise your premium. If you have poor credit, you may end up paying twice as much as someone with a stellar credit score on average. However, according to a report from insurance data firm Quadrant Information Services, even those with fair credit will usually pay about 32% more than those who are able to maintain stellar credit. “It’s all about trying to predict the likelihood of a claim,” said David Snyder, vice president of policy department and research for the Property Casualty Insurers Association of America. Despite that, there are several consumer groups that object to using this method in determining a person’s insurance score. They feel it could potentially penalize someone unfairly when they may have been going through difficult financial times. This argument may be valid since most insurers use their own scoring model, and some from an outside vendor. This could mean other insurers are looking to add more emphasis on their investigation so as to validate a higher premium rate if someone has poor history. In a 2007 report, the Federal Trade Commission found insurance scores based on a person’s credit history were an “effective predictor” in the cost and number of automobile insurance claims consumer would file. Yet, they have also stated that there was no clear evidence to explain that correlation. States such as Maryland and Massachusetts are against this investigatory process used by insurers and don’t allow credit history to be used in setting the rates for homeowner insurance rates, while other states choose to instead limit its use. For these reasons, it would be very wise to not only be cognizant of your credit score and any errors it may contain, but to also try to have it improved. Shopping around with varied insurers will help those with poor or excellent credit to find the insurer that places the right emphasis on the area that best benefits them on pricing.

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In today's mortgage environment there is a slim likelihood of qualifying for low-cost federally backed home loans with credit scores under 620-700.

The standards for lending may have significantly stabilized since the end of the Great Recession six years ago, but this may only apply to those with credit scores of more than 700, according to analysts. For those with what some might consider good credit, there still remain fees and extra costs that create limitation in the home-loan market. The option of higher-cost Federal Housing Administration (FHA) mortgages has become the redirecting option in place for those with minimal credit issues, rather than having federally backed loans available to them. The issue here is these mortgages used to be reserved for those with low incomes and poor-credit borrowers, but are instead being used to accommodate minor credit issue applicants. FHA loan costs remain soaring with high upfront fees for private mortgage insurance, as well as monthly insurance payments that will remain the same over the course of the loan period even if there is any improvement in the borrower’s payment record or home equity. Middle-class borrowers have felt the burn of these high premiums, paying amounts up to thousands in extra costs, rather than qualifying for low-cost mortgages. Even having scores of 620-700 would not help qualify for low-cost mortgages backed by Fannie Mae and Freddie Mac, which have a history of buying or guaranteeing more than half of the nation’s mortgages. Only an average 1 in 6 loans they’ve written have gone to middle-tier borrowers in the first 3 months of this year. The loans have been almost exclusive to “older, wealthier, white borrowers” at a higher rate according to Mortgage Bankers Association President David Sterns, a former FHA commissioner. This has been seen as an overreaction to the mortgage-credit debacle that triggered a global financial crisis, according to many experts. Officials at Fannie, Freddie, and the Federal Housing Finance Agency (FHFA) have tried to encourage lending to lower income and minority borrowers by a reduction in certain fees and beginning to accept down payments as low as 3 percent. Melvin Watt, director of the FHFA, has argued it wouldn’t stop lenders from implementing higher credit standards than is required. “The message we have tried to send is that we need to find a way back to responsible lending to creditworthy borrowers across all market segments.” The companies are imposing extra charges on loans to borrowers with lower credit scores and down payments, which translate into higher interests rates, in order to compensate for the extra risks set in place. Lenders are also feeling the brunt of legal expenses related to housing-boom-era mortgages and are imposing overlays on these borrowers. These consumers can seek out quality credit repair firms to see if improvement from fair to excellent credit score is possible. A high quality credit repair firm can wind up costing "nickels" as opposed to "dollars" over the life of their mortgage loan.

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How Your Credit History Can Impact Your Car Insurance Rate Did you know that your clients’ credit histories play a bigger role in their car insurance rates than their driving record does? Consumer reports show that in many states a poor credit history can have a greater impact on insurance pricing than a DWI. This is quite shocking. Today, there are only 3 states that do not allow car insurance companies to use credit histories as a determinate of a premium. These states include Massachusetts, California and Hawaii. What many people do not know is that insurance companies have their own credit scores based on taking a smaller amount of factors than the FICO scores use. The problem with using a credit history/score to determine a client’s auto insurance rate is that companies are using socioeconomic factors to establish a premium rather than using a client’s actual driving record. An example of this methodology can be seen in New York. Single drivers in this state with a good credit score as well as a clean driving record will pay about $255 more for auto insurance than they would have if they had an excellent credit score. Another example of this is that in Florida, a car driver who has a perfect driving record, but a poor credit report will pay $1552 more than would a driver who had a drunk-driving conviction and a great credit report. Through these examples, it is evident that a credit score plays a bigger role in establishing a car insurance premium than does a driving record. Car insurance companies have been using consumer credit histories for over 20 years. These companies argue that using credit histories is a very reliable predictor of which car drivers are likely to file a claim. This is because credit scores are a good measure of how well people can manage their money. Looking at how well an individual can manage their money is in turn seen by car insurance companies as a predictor of insurance claims. While this may be a dependable method for insurance companies, there has been much debate over it after the Great Recession. Because many consumers’ credit reports were tarnished during the recession, this method has become extremely controversial. As a result, several states are working on banning this practice.

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Why Millennials Have the Lowest Average Credit Scores According to a new study done by Experian it is clear that Millennials (ML’s) have very different credit than other generations.  On average, ML’s have credit scores that are about 25 points lower than that of Generation X’s. In fact, the average credit score for a Generation X is 650 compared to 625 for a millennial. Additionally, the average credit score for baby boomers is about 709. So, why do so many in the millennial generation have lower average credit scores than their elders? Today, ML’s are using their credit much differently than the older generations are. For example, they generally use 43% of their available credit card limits, compared to 34% nationally. Moreover, the average debt for a millennial is approximately 77% of their income, while the national average is 49%. When compared to a Generation X at the same age, ML's are: · Not as likely as Generation X’s to apply for credit cards. Credit cards account for approximately 27% of new accounts for ML’s while it accounted for 46% of Generation Xs. · Slightly more likely to have student loans and those loans account for about 24% of ML's new opened accounts compared to 20% of Generation Xs’. · A lot more likely to take out a loan for automobile insurance than Generation X was. Car insurance makes up about 14% of newly opened accounts for ML’s, while it only made up about 1% of these accounts for Generation Xs. There are many different FICO credit scores but mortgage lenders typically use the FICO 4 version, which ranges from 300 to 850. It is often hard to say what a ‘good’ credit score is since it is all relative to what you are applying for, however, scores that are in the low 600s are generally viewed as average or poor. Additionally, scores that are above 700 are typically viewed as good scores. Anything above a 740 is considered excellent.  Low scores make it increasingly difficult for people to receive loans with favorable lending terms, especially on home mortgages. Due to their average credit score, this could be a determining factor for why homeownership rates are so low for ML’s. In addition, another explanation for the low homeownership rates for ML’s is that they are facing larger student loan burdens than their older counterparts did. Because ML’s have shorter credit histories and thus, thinner credit files than Generation Xs, missing payments and/or higher debt can impact their credit scores more.  The reason behind this is since they have limited credit, ML’s scores will start off lower and thus, when a delinquency occurs, their scores will only drop down from there.  If a consumer had a 780 credit score prior to a delinquency they would wind up much higher than an individual that started at a 620.  The same would occur for high balances on revolving credit.  Because of this Generation Xs are seen as more reliable than ML’s.

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WHY OUR CREDIT SCORES ARE IMPROVING As of March 2015, credit scores have never been higher! In fact, The Federal Reserve Bank of New York found that the average credit score was 699. It is even predicted that if present trends continue, the average credit score could cross the 700 threshold within coming months. The increase in the average credit score can benefit consumers by increasing their flow of credit. This in turn encourages more people to apply for new credit. Additionally, with increasing scores, banks are more willing to lend to the consumer. Before 2008, getting approved for a new line of credit or for a loan from a bank was relatively easy. However, after the banking crisis, this ‘easy credit’ that consumers were so used to changed drastically. Banks were no longer willing to give out loans unless borrowers had a stable job and could afford the loan they were applying for. This forced consumers to reduce their bad debt by deleveraging and to start paying attention to how credit scores work. Some articles suggest that increasing credit scores are due to time frames that have gone by since the banking crisis. A recent article in Forbes stated that since the crisis occurred in 2008 and negative information on credit comes off after 7 years, this is why credit scores will continue to rise. There may be a certain amount of individuals that have seen higher scores due to time passing from the crisis, but many began experiencing losses years after the crisis hit and continued to have damaged credit. Individuals lost employment as well as their homes over many years, so it is highly doubtful that scores are on the rise due to the time passing from the banking crisis and the time frames for negative information to remain on credit. Based on my experience as a credit expert, credit scores are on the rise because individuals and businesses have to change if they want to get loan approvals and credit extensions. Since qualifying for credit is more restrictive now, most people are demanding more knowledge and more information about credit and scores. This understanding is helping consumers improve their scores by navigating the rules of credit correctly. We see poor credit due to the crisis daily and much of it is not due to drop off credit for years to come.

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How Your Credit Score Can Prevent You from Opening a Small Business Having a good credit score can help obtain a variety of things such as a mortgage for a home, better credit cards, and better interest rates and pricing on many financial tools. What most people don’t know, however, is that your credit score can also inhibit you or prohibit you from having a successful business. If you are looking to start up your own company, having a good credit score is imperative. This will help you land decent financing as a new business by itself will not have its own credit history. It is thus your personal credit score that will drive the interest rates of a loan on a new business. Additionally, the better your personal credit score, the better your interest rates on a loan for your new business will be. With better interest rates over the life of the loan, you can save a huge amount of money. If you were applying for a$100,000 loan for a new business and paying it back over a five-year time period at a 3.5%, interest rate your monthly payment would be $1819.17. The total interest you pay over the five-year period would be $9150.20. Comparing this to an interest rate of 6.5%, your monthly payment would be $1956.61 and the total interest you would pay over the five-year period would be $17,396.60. Viewing this specific example, a better credit score with an interest rate of 3.5% would save you $8,246.40 within that five-year loan period. Additionally, since many startups rely on personal funding and no profit within the first few years of opening up, this extra money could be put too much better use than interest payments. Our next post will be an informative article that shares important tips on how to improve your credit score in order to get favorable lending terms on a loan for a new small business.

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How Do Credit Scores Affect Home Buyers? Now more than ever, with interest rates so low, home buyers are looking to purchase new property. Thus, it is vital that your potential clients comprehend fully what their credit score means before they try applying for a mortgage. Buying a home can be a graceful process if applicants prepare in advance, otherwise it can be very stressful. In fact, the majority of home buyers do not know that if they are considering financing a new home, they need to plan at least 12-18 months in advance, in order to allow time for accurate credit score assessment. According to a national consumer survey, nearly 75% of new home buyers feel that it is important to check their credit scores prior to buying a home. However, less than 45% actually understand what it is that a credit score reports. A personal credit score assesses not only the amount of debt a client owes and whether they are presently current, but also the risk they present if they default. This means that just because you are paying on time now does not mean your payment history will be excluded from your FICO score. The majority of home buyers cannot accurately identify the factors in the process of buying a home that a credit score affects. Credit and scores impact a variety of aspects including, interest rate, the amount borrowed, and the lending terms of their mortgage. Clients can easily make the mistake of checking their credit scores only several months before buying a home and many check the wrong score model.  With this in mind, it is imperative to remind clients to check their credit scores as soon as they are considering purchasing a new home and to make sure they know their FICO mortgage lending score. By being proactive and consulting with us, they allow themselves ample time to improve credit scores and/or correct any issues that could negatively affect their scores. With home-buyer season in full swing here are some thoughts on how to get more business and better prepared applicants:   Start with informing your entire customer & referral base – Sending out a mass email or article explaining that preparation should be done 12-18 months in advance of loan application. Having the right debt ratios, credit scores, funds in the bank, and paperwork can make loan approval an easy process. Requesting any potential referrals to contact you early on so guidance can be given well in advance could bring more successful closings, happier clients, and credibility with referral sources.   Being realistic with clients – Explaining what is affordable will allow them to search for homes within their financial reach.  If they cannot get loan approval based on the current information they are sharing, please have them contact us so we can assist them in improving their credit scores.   “Not now” doesn’t have to mean “never” – Don't let clients get discouraged if they can't own a home at the present moment. Advising them of what needs to be done with finances and taking the time with them to explain their options can mean future closings and more referrals now. If credit scores are the issues, referring them to us to improve their credit scores gives them a current option and can mean home-ownership in their future.

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Will Closing Your Amex Business Platinum Card Hurt Your Personal Credit or Business Credit Scores and Indexes? This is a good question. Usually Amex posts credit cards to personal credit reports even if they are business credit cards. To be certain you can pull a copy of your personal credit reports before taking any action. To get a free copy annually go to the annual credit report site. If the card is on the report it can impact your credit scores in a few ways. If it is not on your credit report and you close it there will be no impact to your personal or business credit. Business credit reports do not usually report American Express credit cards as a trade line. Here are a few ways closing your card can hurt you if it appears on your personal credit report: Balance to limit (B2L) ratios on revolving credit have weight on credit scores. Revolving credit is classified as most credit cards, over drafts on checking accounts, and some lines of credit. Both individual & aggregate B2L ratios impact credit scores. For example, if your total limits are 100k and your total balance is 50k you are at a 50% B2L ratio. The closer the balances inch up to aggregate and individual limits the more your scores drop. High balances on revolving credit reflect a borrower’s higher risk to lenders and creditors. Statistics show that consumers with high B2L ratios on revolving credit are much more likely to default. If the card you are closing is in the revolving credit category you are reducing your aggregate limit which will reduce your ability to charge without altering scores. In our last example, if the 50k card was closed with the 100k aggregate limit the 50k balance would become a 100% B2L ratio & the scores would plummet. Scores can drop hundreds of points if B2L ratios on revolving credit are maxed out. There are some Amex cards that are not considered revolving credit. The way to find out is to get a copy of your FICO scores and see what category it is listed in when you view the account. If it says "Open" it is not included in the revolving category & will not impact the B2L ratios as much. If it say "REV" or revolving then it will cause score drops when balances are high. Another negative to closing credit is that you may lose an old account that is adding to the average age of your credit scores. Average age of credit is another factor that can benefit scores. As your average age of credit gets older, more points are added to your score. Since "practice makes perfect" as a credit card holder extra points are given for those with many years of credit management. Once an account closes it can be removed after two years of inactivity. If an old account drops off your credit it can make the average age of your credit younger and reduce scores. Before you close the account check the date it was opened which is listed on the credit report. If it is an older account you will have to consider the potential cost to scores.

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Help your clients through credit knowledge: almost 95% of Home-buyers feel more confident when they know their credit score.

As a real estate/finance professional, it’s imperative to help your customer base and potential buyers/applicants to be aware of their credit and know the importance of having the best credit scores possible. A recent study by Experian highlights some insight into consumers and shows just how important this knowledge is. (You can see the whole survey here: http://www.slideshare.net/Experian_US/experian-home-buying-and-credit-survey-report-2015 ). According to this survey, 95% of homebuyers are aware that credit scores play a large role in purchasing a home, and those who "knew" their scores felt more prepared to buy but just because these potential buyers feel comfortable "knowing" their scores does not mean they should be comfortable. How many of these potential buyers are looking at the "right" credit score? There are so many credit scores to purchase online that vary from the scores used by mortgage bankers. These many scores can range from as low as 280 to as high as 990. Even the "FICO" scores which are used in mortgage banking have about 50 different score versions. If a potential loan applicant is looking at a score that is 30 points higher than the FICO version used by mortgage lenders that 30 point difference could mean a rejection of a loan, higher pricing, or a smaller loan than needed. Here is an example of this score confusion: A buyer pulls his credit online and his scores are a 742. He has read online that 740 plus is an excellent credit score, and he doesn’t analyze his report so he is happy and believes he is in a great credit situation. He and his wife are planning on purchasing a property within the next 12 months, and they hope to get an excellent mortgage rate with this score. However, 8 months later when he meets with a mortgage professional to get a pre-approval letter he is shocked. The banker pulls a FICO 4 version and the score is a 712. The buyer is dismayed and learns the score he pulled was not a FICO score. Now he is scrambling to figure out how to improve his credit and purchase a home in 3 plus months when his lease is up. If the buyer was educated early on, he would have had 7 months to have a credit repair firm improve his scores and teach him how to manage his credit. He would have wound up with a 740 or maybe even a 780 plus. Unfortunately, he was instead stuck with a 712, and can face a total rejection of his loan, or will end up paying much higher interest rates if he’s lucky enough to get approved. Getting back to the study, 45% of future homeowners said they had to put off purchasing a home to work on their credit and qualify for better interest rates. The survey also shows that many future consumers are uncertain about the buying process due to credit issues. 41% of consumers in the survey were concerned that their credit scores would not qualify them for the best rates possible. And of these concerned consumers, 27% did not even know what their score was. Fortunately, the survey also showed that knowledge of credit eased this uncertainty. The survey shows that 70% of people who knew their scores felt significantly more prepared to buy a home versus only 54% for those who did not know their credit situation. Also, the amount of people who felt financially prepared to buy a home (60%) was almost equal to the amount of people who were confident about their credit (62%). Another positive note from the survey is that many consumers are working to improve their credit. 58% of future homebuyers are taking steps to improve their score for the best home loan rates. This includes over 55% paying off debt and 54% paying their bills on time. Many of these potential buyers may not know that hiring a reputable credit repair firm might put them into a score threshold that can save them hundreds of thousands over the term of their mortgage or position them to qualify for a larger mortgage for their dream home. You can use this insight to your advantage by informing your clients as early as possible to check their credit reports and scores. If they purchase their "FICO" scores at http://www.myfico.com/Products/FICO-3-Bureau-Credit-Monitoring/ they will view a variety of FICO scores including a version of the mortgage lending scores along with their full three bureau credit reports. Once the purchase is made they can cancel the monitoring product if they do not want to continue it monthly. Feel free to refer your clients to us to review their credit scores and reports or give feedback on what we can do to help improve their scores.

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The CFPB Cracks Down on Illegal Billing Practices with Verizon & Sprint

As a credit repair expert I often see Verizon & Sprint collections that destroy credit. In most cases consumers have refused to pay based on disagreements in billing. Therefore I was not surprised by the Consumer Financial Protection Bureau’s (CFPB) recent findings. The CFPB cracked down on Sprint and Verizon for illegally billing consumers over a hundred million dollars in unauthorized billing charges. Many consumers became victims through unauthorized third-party charges by clicking on ads for “free” digital content like ringtones or daily horoscopes, and then got charged without their consent. Most people didn’t notice the illegal billing and had no idea that third-parties could add charges to their wireless bills. This continued undetected for months. Unfortunately, Sprint and Verizon had billing systems in place that allowed third-party charges, and they also did next to nothing to stop them. In addition, they did very little to respond to any complaints about the issue. This makes sense in light of the fact that they both received hundreds of millions of dollars by acting as a payment processor for these third parties and received a 30-40% cut for every charge. Luckily for consumers, under the Dodd-Frank Act, the CFPB can hold companies (including payment processors and lenders) accountable for unfair charges like these. If the CFPB settlements are approved, $120 million will be returned directly to the victims.

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How Credit Scores Can Make a Big Difference with Mortgages

As you probably know, having a good credit score can open the door to all sorts of opportunities, like the ability to finance everything from a car to your own business. One of the biggest ways healthy credit makes a difference is through mortgages. Having solid credit can allow people to purchase their dream home and get a better rate that could translate into hundreds of thousands of dollars in savings. Almost every mortgage bank will asses a borrower’s likelihood to repay a loan through their FICO score. The best rates for mortgages go to people with scores of at least 760. As your score goes down rates will go up, and eventually mortgages get outright denied if scores fail to meet a certain threshold depending on the loan. Here’s a hypothetical example that shows credit’s impact: Let’s say you have great credit and want to apply for a mortgage. According to FICO, with scores of 760 or better, the average interest rate is 3.56%. So if you applied for a $600,000 30-year fixed-rate mortgage your monthly payment would be $2,714. However, if your credit score was 100 points lower, the average interest rate would be 4.18%. At this point your monthly payment would jump up to $2,927. Compared to before, you would now end up paying $2,556 more per year, or over $75,000 more over 30 years. Even worse, if your score was in the low 600’s the average interest rate would be 5.15%. Compared to someone with a 760+ score, you would end up paying $203,400 more over the life of the loan! However, there’s no need to panic if you don’t know about your credit. The first key to good credit is understanding how it works. Here are the five factors that impact scores: • Payment history: It is factored by how timely you pay your bills, whether you have any past bills due/bills in collection, or if you’ve declared bankruptcy. • Credit utilization: It is factored by the balances you’re carrying on your credit cards compared to the limit on those cards. To have the best scores, you should be using less than 10% of the total and individual limits on your credit. • Length of credit history: It is based on the average age of the credit you have open. • New Credit: This reflects the number of credit card and other loan accounts you've opened, as well as any inquiries made about your credit recently. Having many hard inquires (or pulls on your credit score by others) can lower your score. • Types of Credit Used: This takes into account the different types of credit on your file. Having a variety of types of credit can sometimes help boost your score. You should also read my other articles on credit to get a better understanding of it (see them here:https://www.linkedin.com/today/author/36444445). Then you can take moves to correct your score. It’s a very good idea to speak with a reputable credit restoration company to assist with boosting your score. Using the right company can help you navigate the credit maze and see results in 20-50 days.

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New Legislation Bans Credit Checks for NYC Job Seekers

On Thursday the New York City Council passed legislation which will ban most employers from using peoples’ credit history in hiring decisions. According to the bill’s sponsor, Brad Lander, “Millions of Americans who have bad credit would also be great employees”. The legislation claims that credit checks for employees are discriminatory, and that job-seekers with bad credit who need a job to repair their credit shouldn’t be prevented from doing so. The legislation is heading to the mayor’s office and Lander is “optimistic” about getting a signature. If the mayor signs off on the ruling it will go into effect 120 days from now. However, you may not be in the clear after the law is in place: employers can still run checks for “jobs of public trust”. This includes positions such as police officers and high-level city workers. Checks can also be done for positions that involve cyber security risks or where there are fiduciary duties to the employer. In addition, state and federal laws still require background checks for positions like mortgage bankers. Currently, around half of all employers run credit background checks on potential employees, according to the Society of Human Resource Management. Federal law requires employers to get permission from job candidates to get a background report, which can include a credit check. In addition to NYC, many other states and cities have passed or are trying to pass similar laws, including Nevada, California, and Maryland. For a full list of legislation on credit checks you can go here: http://www.ncsl.org/research/financial-services-and-commerce/use-of-credit-information-in-employment-2014-legislation.aspx.