Many, many people are renting instead of buying simply because their credit isn’t quite good enough to buy a home. The benefits of owning a home are obvious, not to mention the pride that comes with being a homeowner. So it’s not that they don’t want to buy a house – they do – it’s simply that they feel like it’s a far off dream that can’t be realized anytime soon because of a few dings on their credit.
But what if it was a possibility? And, sooner rather than later?
Most people just don’t know the rules to the Credit Game, and if you don’t know the rules, how will you ever win? We aren’t taught the rules in school and there is no playbook you’re given as an adult to make sure you develop bullet-proof credit. We’re put out on the field to play with no training and no knowledge, and then punished when we don’t do something right.
Credit scoring is not an exact science. It’s an arbitrary score, spit out by the bureaus based on a secret algorithm. It is like the Terminator. It doesn’t care about you as a person or what your situation is/was, your goals in life or whether you think it’s fair. It holds complete rule over your life in the United States – everything these days is influenced by your credit score – getting a car loan, getting lower interest rates, getting that job you applied for or a promotion, the rates you pay for all types of insurance… and of course, buying that home for you and your family.
How Do You Play To Win?
It’s simple. You have to educate yourself. Credit cards, for example…did you know that the bureaus like you to have 3-5 open credit cards on your profile? And, that your usage of these cards will account for approximately 35% of your total credit score? Or, that if you are carrying a balance of more than 25% of your limit, it will begin to negatively affect your score?
It seems counter-intuitive. One would think that the less available credit you have, the better you would score. But that’s not the case.
Of course, paying your bills on time (no payments made 30 days past the due dates) is absolutely critical, along with keeping your balances in check. A variety of different trade lines helps as well… they like to see a real estate mortgage to have truly optimal score. “Pulls” on your credit can also have a negative effect, as can newly established lines of credit. These are both temporary, but good to keep in mind. Four years or more good payment history on credit cards and other trade lines is optimal.
Getting Negative Marks Off Your Credit Report
Many people, when they decide to start building credit, find out that you can dispute negative items on your credit report. Thinking they have found the magic bullet, they send a letter to the credit bureaus claiming it wasn’t their debt, just to have the item verified. Now what?
There are over 200 rules, laws and regulations governing how items are placed on your credit report, to correctly and effectively dispute negative marks on your credit, you need to know these laws and how to dispute those items according to the Federal guidelines. Doing it incorrectly can cause the bureaus to assume that the disputes are frivolous and disregard further disputes, reducing your chances of getting those negative items removed.
Of course, they will have to fall off by law in 7 years (10 years for Bankruptcy) but who wants to wait that long?
The game plan to excellent credit involves 2 distinct aspects. First, getting the negative marks removed. Get a consultation from a professional and see if you would be a candidate.
Second, have a specific plan in place to correctly build your credit, based on what the Credit Bureaus computers want to see. Here at Anthony the Credit Expert, part of your initial enrollment includes a lifetime membership with us, which entitles you to a Free Credit Report Review and Coaching Session every 6 months for life.
We are your coach and here to help you win the Credit Game. For a Free 15 min consultation,click here