Credit Improvement – Baby steps 🙂

Even though most people over the age of 18 know the importance of a good credit score, the path to achieving high marks may be elusive. The temptation to overspend, to live the “good life” by accumulating debt, is strong. If you stumble and fall, just pull yourself up. The effort it takes to repair a damaged FICO rating, the measure that determines your credit score in the United States, is rigorous and time-consuming, but it’s worth it.

Know What Determines Your Score

“Baby steps” are required initially, both to establish credit and to repair a less than stellar rating. Your credit score is partially based on such things as on-time payments for a car, an apartment or a charge card. But that elusive numerical rating, which ranges between 300 and 850, is also influenced by such things as total dollar amount of credit, duration of your credit history, the total dollar amount of credit available to you and what percentage is in play, and the number of credit applications made in recent months. Debt to income ratio is also considered.

There are three major credit reporting agencies and the scores can vary, but all use similar guidelines. The higher your numerical score, the lower your risk, important when you want to buy a home, seek a business loan, sign a contract or apply for a high-limit credit card.

Consider the Future

Your credit rating is also your key to continuing future stability, no matter what your current scores are. Rebuilding a favorable financial history is as important as learning proper methods of debt management. Monitoring fluctuations in your credit scores can also be a vital way to detect fraud and identity theft, all too common in the digital age.

Master a few basic credit tips: Make a realistic budget, and stick to it. Save something from every paycheck. Seek help from professionals. The “big three” of economic health are often considered to be impeccable credit, an emergency fund available for a crisis, and an effective retirement planning strategy.

Develop a Plan

If you have not yet taken the steps to assure credit stability, now is the time. Reassess your goals, restrict your spending, realign your budget, and rethink your lifestyle. By relearning basic steps, if necessary, you will soon be standing tall on your own financial feet, ready to embark on your “sprint” to the future.

Co-Signing – Why to Never Do It

Credit isn’t exactly easy to come by these days. And if you happen to have a good credit score, there’s a chance that sooner or later you’ll be approached by a friend or family member and asked to co-sign on a loan or credit card for them. By doing so, the person with poor or limited credit is able to leverage your positive score for a better interest rate. But is credit a win for you, the co-signer, as well?

The answer: Not necessarily. While you agreeing to be a co-signer is likely done with nothing but good intentions, the outcome could turn out to be far from favorable for you. We’re talking a decreased credit score, collection agencies coming after you and even potential lawsuits. Here’s a closer look at why you should think twice about co-signing on a loan:

Lower credit limit: Like we said in the opening, credit is limited these days. So if you co-sign on a loan, you’re debt ratio might get too high. Not only is this unfavorable for your financial situation – after all, you’re responsible for the debt – but it can lower your overall score, resulting in credit repair to get your score back up to what it was.
Missed payment: Is the person you’re co-signing for reliable? We ask because if the person misses a payment, the collection agency can come after you for it. It’s not what a lot of people have in mind when they agree to co-sign, but unfortunately it becomes a common reality.
Lawsuits: As a co-signer, you’re just as responsible for the debt as the other signee. So if the other signee defaults on the loan payment, you could potentially be sued for the amount owed.

Simply put, if we’re offering credit tips, we’d advise you to co-sign with caution. If you’re approached by a reliable person who has a limited credit history or finances or you are trying to help out your child with his or her first car loan, that’s one thing. But if you’re approached by someone you know is shady and unreliable, that’s a whole different story. So co-sign with caution – because if you’re not aware of the consequences, you could end up on a lengthy quest to repair credit and enact a debt management plan to cover for someone else’s blunder.

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Radio Talk Boston – Tune in!

This week on REAL Estate Talk-Boston:

Tune in this weekend as President of Key Credit Repair Nik Tsoukalis talks about building credit fast, what a perfect credit profile look like and how to prepare your credit for purchasing a home.

Key Credit Repair-The credit repair service of choice for the Nation’s top lenders, realtors and builders for their clients. Key Credit Repair will assist you in understanding each and every aspect of your credit profile The consultation is completely FREE of charge and there is no obligation to enroll.