I have been working in Real Estate for a little while. I have learnt so much and have been put in a position where I can positively impact people’s lives, it is an amazing thing. It isn’t always sunshine and roses. I do run into hard situations from time to time, I have come across so many people this year trying to get into the house market or lease, but can’t because their credit score is bruised, this was part of my journey too. Sometimes clients know, but it is worse when they don’t and they find out after they have started looking for a home. That wall is hard to hit. Co-signers can be hard to come by and land lords who are sympathetic enough to trust you with their investment are even fewer, and what could be more stressful than finding out you have hurtles to jump even before you get to the market….to jump more hurtles.
Where do you start?
Before we get going here I want to remind everyone that my credit score was below 400 only 4 years ago, I understand deeply what the impact of a devastatingly low score can have. When I found out I was having my first daughter I decided I needed a safer vehicle……I purchased my van 5 years before, shouldn’t have been a problem right?!? It was. I had no cosigner, asking anyone and everyone I know, no one could help. Nooooooo one was going to give me a loan, not without a cosigner or a wildly ridiculous interest rate. I took what I could get, I had a small business and a fourth kid on the way, this car payment was going right up there with rent and feeding the kids. Four and a half years later of bi weekly payments totaling close to $400 a month, my 2007 no bells and whistles vehicle is AAALLLLL MINE!! And I paid for it…. probably twice as much as I should have. No way in a world of good credit would I have paid what I paid, I was fortunate enough to have a small lender take me on, and they were very accommodating, I have no regrets. Does that kind of desperate sound all too familiar? Now that I have qualified myself as a recovering bruised credit score, we can proceed with the blog.
Interestingly enough, when I run into clients with bruised credit, they often don’t understand how it happened, or even know what a credit score is. Credit score is a numerical measurement from 200 to 800, the number is reached by the credit bureaus assessment of your creditworthiness as a result of how you repay your loans and or pay certain bills. Companies, banks and lenders report to the credit bureau when you make payments, and immediately if you do not. They also report how much you have borrowed or owe, this goes toward your debt to income ratio report……which is a whole other blog. Credit cards, line of credit, store cards, car loans, pretty much anything that carries a balance and requires a minimum payment at regular intervals reports to the credit bureau. Little not so well known fact that your phone or internet provider reports to the credit bureau too. It is written in all that “yada yada yada” you don’t read and just sign on.
Do you have a credit card? Is it maxed out but you make the monthly minimum on time every time? STILL HURTS YOUR CREDIT!! Yep. I was surprised to learn that one too, if you have a balance of over half of your allowed credit limit, the banks report them as maxed out, and that goes as a negative to your overall credit score number. While we are on the topic of credit cards read your statement, always. On every statement, they let you know if you make the minimum payment every month how long it will take you to pay it off. When you do the math on how much they are earning of your dollars, you will find a way to make that all go away. It should be more dramatic like the Surgeon Generals warnings on cigarettes, “Minimum payments will find you well into your old age factoring in payments to us from your retirement savings” …have an old guy with an oxygen mask bent over a bank counter and stacks of cash around him. Payments are going to be a thing pretty much our whole lives, it is what it is, it is getting to know your limits and to play with in it.
I can go on and on about where you get “dinged” and how to gain it back, I have learned so much. Honest truths. The bank will not look at you for a loan if your credit score is below 620. This score is still considered poor, but it is on the bottom end of good. If you are not there and don’t know how to get back up to it, we need to talk. The TW Credit club will fire back up again in January, check http://www.twstore.ca/cclub/ for details, or email me for details. I am going to leave you with the following tips for now. Thanks for reading, I am passionate about credit liberation. Join us for our small group discussions, you don’t have to disclose any of your information, you can listen in, ask questions and it is free!
Tip #1 – Get your credit cards below half, and keep it there, don’t use your card unless you can pay it right away. I know that sounds silly “then why have a card?”. You need an active credit account to reach a better score faster. I know, I have been credit card free for 3 years, and I am now at the point where it is hurting my credit to not have any active loans I am managing. The score is obtained by acquiring credit and managing it well, plain and simple.
Tip #2 – When you are signing up for a service, ask the sales person if the payments are reported to the credit bureau, and when. This is usually laid out in the fine print…..but lets be honest, who reads that anyway?
Tip #3 – The road to credit rehabilitation starts with reading your statements, and getting honest with your situation. Get familiar with how much you are paying out in interest every month, that is a tough one to swallow. Read the fine print, and get aware of what your payments are doing to your debt and score.