14 Common Credit Mistakes

Establishing credit and wisely managing your credit becomes easier when you know how. You'll feel empowered by taking knowledgeable steps towards good credit, and you'll be on your way to purchasing real estate and greater financial freedom.

If you plan to finance real estate, either as a home buyer or an investor, avoiding these common credit mistakes will help you with your credit score and save you money in loan costs.

14 Common Credit Mistakes

1. Using expensive or undesirable types of credit costs too much and is negatively scored.

2. Accumulating too many lines of credit or too many credit cards causes credit report remarks like "too much consumer credit."

3. Only paying the minimum due keeps balances too high.

4. Being maxed out on any credit card or line of credit causes deep drops in scores.

5. Taking cash advances costs higher interest and extra fees.

6. Exceeding limit and having to pay over-limit fees is a negative with creditors and causes "high proportional amounts owed" remarks on credit reports and subtracts credit score points.

7. Paying a day or more late causes unnecessary late fees and often increases interest rates.

8. Charging more than you can afford causes a snowball effect of amassing debt with no easy way to pay it off.

9. Letting someone else use your credit, such as co-signing a loan, raises your debt-to-income ratio and possibly adds "too many consumer accounts" on your credit report, which lowers your score.

10. Ignoring credit problems causes unnecessary negative impact. Talk to creditors before being late and make arrangements. This action heads off negative reporting to credit bureaus.

11. Failure to report address changes to creditors causes misplaced bills and late payments.

12. Using partial name, different names, initials instead of whole name, or forgetting Sr. or Jr. causes mix-ups. Use your full legal name to protect you from confusion with similarly named borrowers.

13. Failure to report name changes to creditors also causes confusion.

14. Not checking credit report frequently is one of the most common mistakes consumers make.

You can buy real estate with poor credit, but you will save thousands in loan costs if you maintain good credit. A bad credit report leaves home buyers with sub-prime loans which have higher point charges, prepayment penalties, and higher interest charges, which therefore cost more money.

For instance, a mortgage loan of $150,000, 30-year, fixed interest rate of about 5.72 percent costs around $870 a month. Poor credit scores raise the interest rate over 9 percent and the payments over $1,200.

As you see from these payment differences, good credit means that you can finance a more expensive house with the same income, or save $330 each month.

Credit Requirements for Mortgages

Credit needed to buy real estate is not the same as good credit. Besides your credit score, mortgage lenders consider your debt-to-income ratio and other credit matters, unlike other credit grantors. Your debt-to-income ratio is the comparison of mortgage payment, including taxes, interest, and insurance to your total gross monthly income. Real estate lenders also consider your employment qualifications and your overall debt ratios. Understanding the difference between good credit and the credit needed to obtain real estate financing helps you buy houses!

Avoiding credit mistakes helps you get strong credit and keeps your credit scores up.

(c) Copyright 2005 Jeanette J. Fisher. All rights reserved.

Professor Jeanette Fisher is the author of "Credit Help! Get the Credit You Need to Buy Real Estate," "Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits," and other books. Jeanette and her husband chose real estate investing to be able to care for their daughter with special needs. While buying and selling millions of dollars worth of real estate, the Fishers were forced into becoming credit experts. Forget what you've been told about credit. Get the credit you need to buy real estate. Real Estate Credit Help Center: http://RE Credit Help.com/

---

Repair Your Credit - The Right Way!

How to Repair a Bad Credit Rating?The Right Way!If you... Read More

How To Save Money On Credit Cards

Some credit cards offer a cash advance option. But how... Read More

Credit Card Dirty Tricks

There are many of us that have been badly stung... Read More

What You Need to Know about Debt Negotiation on Credit Cards

Debt negotiation on credit cards is often referred to as... Read More

Five Credit Card Billing Problems and How to Fix Them

It goes without saying that your first and best defense... Read More

Cash Back vs. Rewards Credit Cards

Ah, the sweet rewards of using credit!Not only do you... Read More

Will Inquiries Lower Your Credit Score?

What are inquiries?When you apply for credit the creditor or... Read More

How To Establish Great Credit

Building a good credit history is important. If you have... Read More

How To Choose Your Credit Card Application

The articles and tips provided on this site are intended... Read More

Credit Cards or Store Cards - Which Is Better?

Introduction In this article, a presentation is made of the... Read More

Why Does FACTA Matter to Me?

FACTA stands for Fair and Accurate Credit Transaction Act. FACTA... Read More

Useful Tips on Using Credit Cards

Here are some useful tips on using credit cards. Whether... Read More

Minimize your Risk for Identity Theft

Identity theft is the fastest growing crime in America. According... Read More

The Things That UK Lenders Like to See on Your Credit File, (and? What They Don?t Like to See!)

Lenders are quite fussy about what they like to see... Read More

Good Credit Is a Necessity for Everyday Living

Most of us want a good credit report to obtain... Read More

Simplifying Your Search For a New Credit Card

Today, selecting the proper credit card can be a bit... Read More

Understanding Credit Card Penalties

Because most of us have one or two credit cards... Read More

The Ghost of Expected Surprises

Here, Cratchet, what do you think you're doing?Uh, er, leaving... Read More

The Hitchhiker?s Guide To Insanity

A new sickness is plaguing the UK called Denial. Denial... Read More

A Cure for an Ailing Credit

Credit has become a much-used word, thanks to the various... Read More

4 Steps to Creating Good Credit

As a consumer you've learned the importance of establishing a... Read More

Why Americans Find Predatory Lending Offensive

"Menis - the author translates as "indignant rage" - It... Read More

3 Ways to Improve Your Credit Score by 50 Points In Less Than 30 Days

In Less Than 30 Days. "What can you do to... Read More

Credit and Its Cost

What is Credit? Credit is money granted by a lender... Read More

Avoiding College Credit Card Traps

Congratulations college freshman! You're about to embark on one of... Read More