Credit Talk Tuesdays

I think I am going to designate my Tuesday blog to credit issues for a few weeks. We already discussed Credit Utilization Ratios so let's move on to something else. Let's look at 5 things that will sink your credit score like the Titanic.

1. Late Payments. Payment history is said to make-up 35% of your credit score.(The only thing worse than late payments is no payments.)

Some Examples

• Late Mortgage Payments
• Late Credit Card Payments
• Late Utility Bills (I've seen a $400 utility bill drop a credit score 100 pts)

2. High Credit Utilization Ratio

3. Tax Liens

4. Bankruptcy

5. Foreclosure

Credit issues are a really important thing to discuss. If you do not care for your credit everything you buy will become more expensive for you than it will the individual that maintained a good credit rating. The riskier the borrower you are, the higher interest rates you will pay. If you are a Wisconsin resident interested in how your credit score will or is affecting your mortgage interest rate feel free to contact me!

Before You Cancel That Credit Card - Let's Talk Credit Utilization Ratios

First of all what is a credit utilization ratio?

- It's the 2nd most weighted item in your FICO score

- It's the ratio of your outstanding balances divided by your total available credit.

ie. $3000 of outstanding balance / $10000 of available credit = 30% utilization ratio

What is a good ratio?

30 percent to 35 percent or less

Things to consider?

The weighting of the credit utilization ratio by Fair Isaac should be considered when you think about closing a credit account. Using the example above, if you closed a credit card with $3000 of available credit, your total available credit drops to $7000. Now when we take that $3000 outstanding balances / 8000 of available credit = 42.8 percent which will probably result in a lowering of your credit score.