For many people, "What's your score?" has become a more popular phrase than "What's your sign?" although it will never be much of a pick-up line in a bar. It will, however, affect your life much more than your horoscope will. Your ability to get a car loan or a mortgage loan is affected by your credit score. How low an interest rate you will get on your loan is affected by your credit score. Many people are unaware that their credit scores may have resulted in their paying a higher interest rate on their mortgage loans than if they had a higher credit score. Telephone companies also use credit scores to determine whether to provide service and, if so, what deposit they may require. Your credit score may also affect how much you may be authorized to take out on a daily basis from your bank's ATM. Even when you apply for a job, your credit score is important. Some prospective employers equate bad credit with unreliability, regardless of your astrological sign.
FICO credit scores range between 300 and 850. As so often is the case (with the notable exception of your cholesterol reading), the higher your score, the better. |
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Inspection.
The real estate agent who is working for the seller mayor may nothave a conflict of interest in recommending an inspector, so you may want to retain one on your own. You should receive a written report from whomever you use. It also is very helpful to accompany the inspector during the inspection to discuss any problems the inspector may uncover. It's actually kind of fun, and a good inspector can be very helpful in advising you about making repairs and minor improvements later on.
Mortgages.
Stick with garden-variety mortgages. Your parents probably survived quite nicely on an old-fashioned fixed-rate mortgage, and these are still the best mortgages for many first-time home buyers if interest rates are relatively low at the time the mortgage is taken out and you expect to stay in the house indefinitely. Adjustable-rate mortgages with reasonable caps on future rate increases are also fine. Avoid unusual financing arrangements, notably interest-only mortgages where you never pay down principal and adjustable-rate mortgages (ARMs) with substantial future hikes in the interest rate. These latter mortgages were the cause of the recent subprime-lending debacle. Homeowners had been induced into taking low-interest ARMs whose interest rates rose dramatically in future years.
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One important thing to remember: if you use a consumer-credit-counseling organization, it will be reported to the credit bureaus and noted on your credit record. That fact should not deter you from using a credit counseling service, particularly if your only other alternative is filing for bankruptcy. While you may ultimately have to resort to bankruptcy, give credit counseling a try first.
Personal bankruptcy, when all else fails.
If you find that neither your own good efforts nor those of a credit counselor can salvage your situation, personal bankruptcy may be your only alternative. Some attorneys make it sound easy, but you should consider it only as a last resort. Bankruptcy is by no means the end of the world, but it will impede your access to credit for at least a few years.
Check your credit reports for errors.
You are entitled to request and receive a gratis (free) credit report once a year from each of the three credit bureausEquifax, TransUnion, and Experian. You may do so by visiting www.annualcreditrefort.com or by calling (877) 3228228 to request your three reports. Chances are you will have an error on at least one of the credit reports. Review each report carefully and follow |
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