Home Expert Newsletter – Credit Score Myths and Housing Market Highlights

July 26th, 2013

Home Expert Tips from Beth Proctor

 

Beth Kellan, REALTOR® | Windermere/Cronin & Caplan Realty Group, Inc. BethKellan@windermere.com | 503-740-4485

 

In This Issue

Credit Score Myths and Housing Market Highlights

Links that Make Life Easier

The Lighter Side

 

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Hello Beth,  

Beth KellanThe housing market is in full swing and it seems as though everyone knows someone who is shopping for a home.  With that in mind, here are some must-know tips on how to keep credit scores in top shape.

(Please feel free to forward this email on to those you know who would find the information helpful.)

By the way, if you or anyone you know has a real estate need, please contact me today. I’ll always provide first-class service!

 

 

 

 

Credit Score Truths and Myths

 

Magnifying glass and credit score

 

Ah, the mysterious world of the FICO® credit score, a number used by most lenders to evaluate creditworthiness.  A difference of just a few points can have a big effect on the mortgage rate a borrower qualifies for, so let’s look at some commonly misunderstood truths and myths about credit scores:

 

   

- You can buy your FICO score directly from one of the main  credit reporting agencies:  Experian, TransUnion, or Equifax. 

 

This is a myth. 

 

All three of these agencies generate FICO scores, but chances are that what they will sell you is their own brand of credit score, not your real FICO score.  (It’s definitely a “check the fine print” situation.)

 

Any offer that does not contain the word “FICO” in the name of the score is probably providing something different, even if it references the names of the three main credit reporting agencies.    

 

Tip:  To access your three FICO scores yourself you’ll need to go to MyFICO.com, where you can either purchase them for around $20 each or receive them as part of a paid monthly service. 

 

 

- A FICO score of over 760 is considered excellent. 

 

This is true. 

 

FICO scores range from 300 to 850.  In general, over 760 is considered excellent, 700 to 759 is good, and 660 to 699 is fair.

Click below to see a helpful infographic:
Techniques of People with the Highest Credit Scores in the Nation

 

 

- Your credit report shows your credit score.

 

This is a myth.

 

Your credit report lets you review past and current lines of credit, payment history, and amounts owed, but does not provide your credit score.  

 

Tip:  The official website where you can get your three credit reports from the main credit bureaus for free each year without having to sign up for anything is AnnualCreditReport.com

 

 

- Shopping for a mortgage will lower your credit score.

 

This is mostly a myth, according to myFICO.com. 

 

MyFICO.com states that inquiries from the last 30 days are ignored.  Older inquiries that are grouped within either a 14-day or 45-day period are treated as one inquiry, and therefore could have a small effect.  (The 14 or 45-day time frame depends on whether an old or new version of FICO is being used.)

 

 

- Never taking out loans or using credit cards improves your rating.

 

This is a myth.

 

Up to 35 percent of your credit score is based on how you use credit.  Showing a good payment history on a reasonable combination of revolving credit and installment loans, such as a couple of credit cards and a car payment, is often better for your credit score than not using credit at all.  

Amazing, but true:  Lenders sometimes balk at offering mortgage loans even to people with excellent credit scores (i.e., over 800) and hefty down payments if they have no recent history of using credit.  This is especially true when it comes to jumbo loans.

 

Most mortgage professionals advise clients in this situation to make some small credit card purchases and pay them off in full for a few consecutive months before applying for a mortgage. 

 

 

- Closing out old credit card accounts can hurt your score.

 

This is true.

 

Closing out a credit card means that your total amount of available credit decreases, so any debt you have now constitutes a greater percentage of your available limit.  Increasing this utilization ratio of debt to available credit can lower your score.

 

Tip:  The age of your credit lines is another important factor, so if you do close out credit cards, try to close just the newest ones. 

 

 

- Opening up new lines of credit can hurt your score.

 

This is also true.

 

Some people take out new credit cards in order to decrease their ratio of debt to total available credit.  However, a credit score can be dinged by numerous new lines of credit, especially in the short term, and newer accounts carry the least positive weight.

 

 

- Paying your entire credit card balance off each month means large charges won’t affect your score.

 

This is often a myth.

 

It depends on what day of the month your credit card company sends balance information to the credit reporting agency.  If it is before you typically pay your bill, a large charge could show up as a significant usage of your total available credit even if you pay it off entirely as soon as you receive the statement.  

 

 

- Carrying smaller balances on several credit cards is better than carrying a large balance on one card.

 

This is true.

 

Charge cards.Using a lot of available credit on one card means you are closer to maxing it out.  Spreading a balance between two or three cards lowers the ratio of debt to available credit for each card.

   

 

- Business credit cards don’t show up on your credit report.

 

This is true. 

 

 

- Having a large amount of available credit lowers your credit score. 

 

This is generally a myth. 

 

People with high credit scores often have several credit cards with very high limits and very low revolving balances (i.e., under 7 percent) on just one or two, if any. 

 

 

- A crucial step in maintaining excellent credit is to check it regularly.

 

This is true.

 

Identity theft can happen to anyone, and credit bureau mistakes don’t discriminate.  The only way to be certain that the information on your credit reports is accurate is to review it regularly.  Pulling your own credit report is a “soft pull” that does not lower your score.

 

 

    


Recent Housing Market Highlights

 

 

- U.S. home prices rose 12.2 percent year-to-year in May, according to a July report by CoreLogic

Mortgage rate graph. 

   

- The national average 30-year fixed mortgage rate is around 4.5 percent as of early July, up from around 4 percent during the latter half of June. (Data from BankRate.com.)

 

 

- The median market time for all homes in May was 41 days, down from 46 days in April.  In May of 2012 the median market time was 72 days, according to the National Association of REALTORS®.

 

 

 

 

 

Are you planning to buy or sell a home, or do you know someone who is?  Please call or email me – I’m never too busy to help you and the people you care about with real estate.

 

 

(What the lawyers make us say: The information in this newsletter is deemed reliable but not guaranteed. Please always consult a qualified expert before making decisions based on this content. Nothing in this article is meant to be taken as expert legal, financial, or medical advice.) 

 

  

   

 

 

Links that Make Life Easier 

 

Sometimes real estate-related, sometimes not… these are assorted links that come in handy:

 

FICO® Credit Score Q and A

There’s a huge amount of information about credit scores at the myFICO.com website.

  

Great Schools

Read parent reviews of schools, see test scores, and find plenty of other school-related information on this user-friendly school evaluation website.

 

Deck Design Photo Gallery

Get ideas for deck and patio decor from this fun photo gallery on the Houzz website.

 

Save the Bees

Find out about simple ways to provide habitat for bee populations that are under stress from Colony Collapse Disorder.

Waze Traffic App

Waze is an application for smartphones that allows users to submit and receive traffic updates in real time.

 

 

The Lighter Side


Dog looking guilty. 

 

If you’re in the mood for a laugh, check out DogShaming.com, a website where dog owners finally get the last word by posting photos of their dogs “explaining” what they did to get into trouble.  (You can just imagine. :) 

 

Click the image here or this link to see a whole host of funny (and usually appropriately contrite) pooches.

 

 

 


 

 

I welcome the opportunity to serve you, your friends and your associates. Please give me a call today if I can be of assistance.

 

Warm Regards,

 


Beth Kellan
Windermere/Cronin & Caplan Realty Group, Inc.

email: BethKellan@windermere.com
phone: 503-740-4485


 


 Beth Kellan

Need a Referral?

 

Would you like a recommendation to a good service provider? Just call or email me.  I can always refer you to someone that either my clients or I have used with good results.

 

I recommend the best service providers and resources I know, but I don’t assume any liability so please use your best judgment. Feedback on your experience is welcome.

 

 

If you are currently working with another agent this is not an attempt to solicit that business.
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