Credit scores are changing and are difficult to understand. Every family needs to become aware of what changes are being made and how to protect their credit.
In society today, credit affects many aspects of life. Whether you are applying for a job, buying a car, switching phone or cable services, shopping car insurance or shopping for a mortgage, you may be disqualified or pay higher rates based on your credit score.
Most people are familiar with credit reporting… good and bad. However, most people are confused as to their ability to control their credit. A common misconception is if you pay on time, you have good credit. Not necessarily true according to B.J. Magnuson, a loan officer with The Mortgage Store. "Maintaining good credit involves juggling all avenues of your credit. Your credit score is driven by the number of trade lines, length of credit, derogatories, inquiries, pay history and balances on your credit limits. People also believe that once you make a credit mistake that it haunts you for a long time."
"Credit is a funny thing…. If you make a late payment or have a dispute with a medical collection, it is rarely damaging for any length of time. There are easy adjustments that can be made to restore your credit score," continued B.J..
Common sense would dictate that if there are errors or old collections on a credit report, then the bureau must be corrected. That too can be a grave mistake according to B.J. Magnuson. "Many people make the misguided decision of evaluating their own credit. With great intentions, the majority of people attempt to repair their own credit. Fixing the wrong item on a credit report can actually lower your credit score," according to B.J. "Some items are just best left alone. Others though need to be corrected. The trick is knowing the difference."
So what does the average person do to maintain a good credit history or repair a damaged one?
"Each person has a unique situation and rarely does advice pass from one person to another. One must seek out someone who has experience reading and evaluating credit reports. We spend a large amount of time educating our customers. Our philosophy is quite old fashion: Customers come first. Always. Even though their mortgage needs may have come and gone, they are our customers for life. We encourage our customers to call or stop in anytime with their questions. We want our customers to thoroughly understand their credit," explained B.J.
Understanding credit is a complicated task. And, the value society has placed on credit history and credit scores, has created a need for consumer education. It may be difficult, it may be complicated but if the consumer does not become educated, the consequences could be very expensive.
Mortgages…
What is happening?
The mortgage world is turning upside down right now. Investors are in a situation where mortgages are in default at a record high. Borrowers who are use to walking in their bank and receiving the white-glove treatment are now being turned away.
"We all knew this day was coming. Qualifications were too simple. Past credit was too easily overlooked. Debt-to-income tolerance was too high. The truth is the industry was attempting to build bridges without proper support. Just because someone could qualify on paper doesn’t mean they should have been placed in the loan they were requesting," explained B.J. Magnuson, a loan officer with The Mortgage Store. "Consumers don’t just need mortgages, they need assistance. Occasionally customers ask for loan amounts that are not suitable for their budget. Consumers often times innocently trust their Loan Officers and don’t understand they are being placed in a loan that will be adjustable in a short time. If the mortgage payment increases or if an unexpected financial situation arises, the consumer is in trouble with nowhere to turn," continued B.J.
"Although the industry has eliminated many programs, there are wholesale lenders right now trying to prove to the everyday consumer they are still there for them and still financially strong. Typically wholesale lenders’ rates are lower than the local banks and their qualifications are more flexible. For a consumer who needs to secure a fixed rate mortgage, or lower their payments by alternate means, there still are solutions," described B.J. Magnuson.
The market still offers great rates and a variety of loan programs. The consumer can still have their needs met. The difference is…. The consumer needs to look outside the box. If the local bank can’t help, there are plenty of options available.
A World of Advice…
Your personal information is readily available to the wrong people. What can you do to protect yourself?
Do not sign the back of your credit cards. Instead, write "Photo ID Required."
Do not put the complete account number on your check when you are writing out credit card bills. Only use the last four digits. The company can get your information from those numbers.
Only print your work phone number of your checks. Use an alternative address for your checks as well. If you have a P.O. Box use that, otherwise, use your work address.
NEVER put your social security number on your checks.
Copy all of the contents in your wallet, front and back. If you ever lose your wallet, you will know exactly what was in there and how to contact everyone.
File a police report immediately if your wallet or purse is stolen.
Call all 3 credit reporting agencies. Also call the fraud line for Social Security.
Important Phone Number Contacts
Equifax Fraud Activation Line: 800-525-6285
Experian Fraud Activation Line: 888-397-3742
Trans Union Fraud Activation Line: 800-680-7289
Social Security Administration Fraud Hot Line: 800-269-0271
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