The South Carolina Real Estate Association reported earlier this month that home sales across the state have fallen 34 percent so far this year and the market could get more lean during these economic times as lenders become more stringent in their qualification process for granting loans. Already rejection rates are soaring for people applying for home loans. Nationally syndicated finance columnist Liz Pulliam Weston says before the recession, lenders went overboard when they decided to extend credit further and further relying too heavily on credit scores. Weston says lenders now have gone “old school” and are now going back to looking at people’s income, their other debts, and their assets in determining if they can pay back a loan. Still in all, Weston says your credit score is still very important. If your are looking to repair your credit or improve your credit score, Weston says you may want to think twice before closing any accounts or cancelling credit cards.
“Closing accounts can’t help your score and it can hurt it. In other words, closing accounts isn’t going to help you so I would try to keep them open and active if you possibly can. If you’re facing a situation where they are going to raise your rates, unless you agree to close your account, that may be your best choice.”
Weston says if you’re a member of a local credit union, you may want to inquire about transfering the balance of a high rate credit card to a credit union card or an installment loan to get a more reasonable rate.
Weston says if you have had a recent hospital stay or outpatient medical procedure make sure the bills have been paid. Weston says many consumers are surprised that outstanding medical bills can adversely affect your credit score. “Something fell through the cracks between a doctor and a hospital and an insurance company and rather than tell you that the bill hasn’t been paid, they just turn it over to collections. About a third of the people out there have some kind of collection on their report and about half of those are medical collections so you really want to bird dog those medical bills and make sure they are paid. If you get a bill that hasn’t been paid follow up.”
Weston says it is important to note that the three main credit bureaus are private businesses and they are in competition with each other so the information on their reports are likely to be different. Weston says you should obtain your credit report from all three bureaus, go through the reports, and dispute any information that is not right. Weston says to maintain a solid credit score be vigilant in paying your bills on time. “Anytime you miss a payment and it doesn’t matter if it’s on your mortgage, your credit card, whatever, you risk doing damage to your credit score and Sometimes that risk can be severe. If you have a good score missing even one payment can knock a hundred points off your score.”
Weston says most people would be surprised to know that half of Americans have a solid credit score of 700 or above and 40 percent have a score of 740 or above, which is excellent. However, Weston says we are moving into a situation where we are turning into a country of credit “haves” and “have nots.”