Credit Score Killers

Here are some Credit Score Killers - Avoid them ALL!

#1 - Foreclosure. Your home mortgage is probably your largest and most significant obligation. It also carries a significant amount of weight in regards to your credit score! A foreclosure signifies that you were not able to live up to your end of the agreement to make "substantially equal payments" over a specified period of time. It has been called the "Scarlet Letter" on your credit report. Communicate, Communicate and Communicate MORE with your lender if you get behind. Avoiding them does not make the problem go away and will only hasten their actions. Stay on top of this one!

#2 - Co-Signing for a Loan. Have you ever been contacted by a friend of family member to co-sign on a loan for them? Do you know why they are asking you to do this? It is because the bank/finance company doesn't think that they are worthy of establishing a credit relationship. Loan companies and banks are not in the business of making loans - they are in the business of being paid back for the money that they lend! If your friend or family members defaults on the loan, you will be responsible for a full repayment. Besides hurting your credit, it will also destroy the relationship. Don't risk either one!

#3 - Late Payments on Credit Card Bills. This one may not seem like a big deal but a few of these on your credit report can easily drop your score by 75-100 points! Stay on top of your payments and make sure that you get them made on time!

#4 - Maxing Out Your Credit Cards. Your credit score is a complicated calculation based upon the amount of your credit limits, along with the amounts that you have actually borrowed in addition to the timeliness of your payments - and several other factors. Maxing out your credit cards will lower your score because you have borrowed a greater percentage of the total amount of your credit limits and signifies distress in your financial health. This will lower your score significantly and should be avoided.

#5 - Settling Your Debt for Less than You Owe. This action can provide you with a tremendous sense of relief but it is not without consequence. Settling a Debt for a lessor amount indicates that you were not able to completely fulfill your obligation to a creditor and weighs heavily against your credit score. Make sure that you weigh all of your possibilities before moving in this direction because the impact on your credit score is substantial! This isn't a horrible option but just understand the impact that it will have for a long period of time on your scores!

Bottom Line - if you need help and direction, ask for it and make sure that you are dealing with someone who has your best interest at heart! Avoid "Credit Counseling Services" and "Debt Settlement Companies". They charge you a lot of money and it will take years for your credit scores to recuperate! Work with someone who has "the heart of a teacher" and who will walk you through and explain the entire process - all positives and negatives.

Contact us today for a FREE Consultation!