Is It Best To Buy A New Car Before Or After I Buy My House?

This week we are republishing some of our most popular articles in case you missed them the first time around. I believe these articles will be very helpful to you.I am often asked, Is it best to buy a new car before or after I buy my new house?

If your goal is to refinance or purchase a home within the next 6-12 months, it’s best to wait until after you close on your home before taking out any additional loans*.  New indebtedness will almost always cause your credit scores to drop automatically, even if you are making the payments on time.  Furthermore, the new loan may have an effect on the home loan amount for which you can qualify by impacting your debt to income ratio.  Simply put, the new loan, whether car or other, could cause you to have to wait a longer time before your credit scores recover enough to qualify for the purchasing/refinancing of your home. Plus, the new loan would likely cause you to qualify for a smaller home loan amount. So if you are considering trading in, refinancing, or buying a car…wait until the day after you close on your home loan to do so.  *Additional loans include: personal loans, auto loans, and other installment loans.

HOPE educates and guides our clients through the maze of credit questions, just like this one, that can effect the outcome of their financial decisions. If you would like to find out more please call us at 704-499-9696. We are waiting on your call!

What Is A Healthy Credit Card Balance?

I am often asked,  "What is a healthy credit card balance?" It is an important question for consumers to ask since your credit card balances can impact your credit scores quite significantly. In answer to the question above, the best balance is $0.

When you allow your credit card balances to rise over 50% doing so can significantly damage your credit scores, even if you are making your monthly payments on time. Paying off your cards to $0 (and never charging more than you can afford to pay off each month) is the ultimate goal. However, that does not mean your balances have to be at $0 before you might begin to see some score benefit.

When you pay your balances to below 50% you will generally see a credit score increase to some degree. Once the balances fall below 30% you will possibly see another credit score increase. When you pay the down to 0% - 1% of your credit card limits you should receive your maximum potential credit score increase.

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Ron Lambright is considered to be one of the foremost credit experts in the entire country. With nearly 2 decades of experience, Ron is called upon weekly to speak at seminars educating attorneys, loan officers, Realtors, and consumers regarding the complex subjects of credit reporting and credit scoring. Ron is also regularly featured on talk shows and podcasts and has been published in numerous articles, educational handbooks, and blogs. He is an expert at teaching consumers and business owners how to achieve “loan ready” credit reports as well as being an expert in the fields of business financing, business credit, and credit score improvement strategies.

You can connect with Ron on the HOPE4USA Facebook page by clicking HERE. 

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Life Events Affect our Credit.

Life events can effect our credit drastically. I run into people everyday who had great credit at one time but now they find themselves in a situation where they cannot qualify for a home loan. It does not take very long and a great credit score can go down quite quickly. Sometimes it is a job lay off (there are almost 7 million Americans drawing unemployment checks right now), an accident or an illness. These things many times come upon us without warning.

Many times people find themselves unprepared for these emegencies. The bills keep coming due every month and the income has been drastically reduced. Before long they start to fall behind and new lates begin to show up on their credit reports. I have seen one new late drop a crdeit score 100 ponts while the average is probably more like 30 to 40 points. The rest of the bad news is that it will effect their credit scores for at least two years.

Whether unexpected life events have lowered your scores or just bad past credit decision there is a way back to healthy scores again. There are certain prinicipals, if followed, that will cause your scores to climb fairly rapidly. You can rebuild your credit file so that it will be healthy, assuring you of a much better interest rate.

At HOPE we educate and help our clients make wise credit decisions every day. If you would like to know how you can improve your current credit situation please give us a call at 704-503-3669. Our staff is waiting for your call.

Credit Facts in the News Part 8

A very important part of your credit education is staying on top of credit facts in the news. This week we will take a look at things that are happening right now that affect your total financial future. According to The Boston Globe, Congress passed the Credit Cardholders' Bill of Rights Act of 2009 and sent it to President Obama for his signature. This bill amends the Truth in Lending Act and provides consumers with many reforms to the way credit cards are issued and administered today. According to the bill that was passed, here is a summary from the Library of Congress of what it means to consumers:

• Creditors cannot increase the annual percentage rate (APR) during the first 12 months of opening up an account. • Creditors are required to provide consumers with a 45-day advance notice of changes in rates and significant contract changes. Rates that change due to a change in the index that the rate is based on are excluded from this 45-day notice requirement. • Promotional rates need to be in effect for at least six months from the beginning date of that promotion. • Creditors need to provide a 30-day advance notice of an account closure. • With certain exceptions, credit card issuers are prohibited from charging a finance charge based on the double billing cycle method. • Creditors are prohibited from charging a fee on an outstanding credit card balance at the end of the billing period if the fee is attributed to the interest accrued on an outstanding balance that was fully repaid during that preceding billing period. • Consumers have the right to reject a new credit card after the creditor notifies a consumer reporting agency of its corresponding account. • Creditors are required to remove information provided to a consumer reporting agency about newly established credit card accounts if the consumer has not used or activated the account and and if the consumer contacts the creditor within 45 days of its establishment to close it. • If two or more different APRs apply to different portions of an outstanding balance, the amount of any payment above the required minimum payment needs to be applied to the balance with the highest APR first and then to lower APR balances. • Creditors are required to provide a grace period for payments even if the cardholder takes advantage of a promotional rate balance or deferred interest rate balance. • Creditors are required to send credit card statements at least 21 days before the due date of the outstanding balance. • Creditors are prohibited from providing credit to consumers under age 18 (unless they are emancipated under state law, or the consumer's parent or legal guardian is designated as the primary account holder). • For college students who do not have a co-signer, the maximum amount of credit extended will be limited to the greater of 20 percent of the student's annual gross income or $500 dollars. The aggregate amount of credit extended from all of their credit cards will be limited to 30 percent of the student's annual gross income (for the recently completed calendar year). • Creditors are prohibited from opening a credit card account for any college student who does not have any verifiable annual gross income or already maintains a credit card account with that creditor, or any of its affiliates. • Creditors are prohibited from charging a fee to make telephone and web-based payments. However, a fee may be charged for expedited telephone payments made on the due date or the day before the due date. • Creditors are required to post their written credit card agreements on the internet.

At HOPE we keep our clients educated on news that effects their credit. If you would like to know more call us at 704-503-3669. Our staff is waiting om your call.

Credit Facts in the News Part 7

A very important part of your credit education is staying on top of credit facts in the news. This week we will take a look at things that are happening right now that affect your total financial future. According to Nurido News, There are a lot of myths about the credit score. Many people tend to think that some credit activities can lower their credit score. Here are a few facts about your credit score.

Checking your credit report does not deteriorate your credit score: Checking your own credit report goes down in the credit report as a soft inquiry and hence does not affect your credit score. However if a lender or a credit card company checks your credit report, it goes down as a hard inquiry and may cost you five points. But another important fact to be kept in mind is that all the inquiries in a 14-day period are considered as a single inquiry. The credit score rating system also does not take into consideration all the inquiries made within a period of 30 days before the day the credit score is to be computed.

Closing old accounts does not improve your credit score: Many lenders might tell you to close old accounts that are not in use. But doing this simply robs you of a long credit history and more percentage of your total credit limit is used up if you close your account.

Your FICO score is all you need: All the three major credit bureaus give you a FICO credit score rating formula. So your FICO score says all about your credit score and you don’t need to bother to look for something else to calculate your credit score. Using the FICO Credit Score Rating System, the credit bureaus give you a credit score. However the names for these credit scores are different at these bureaus. At Equifax, they call it Beacon credit score. At TransUnion, they call it Empirica. At Experian, it is called Experian/Fair, Isaac Risk Model.

The reason that you get different credit scores from all the bureaus is that reports of some credit activities performed by you is sent to one bureau and some to other. But more or less your credit score is the same.

Credit counseling does not hurt your score: The FICO credit score rating system does not take into consideration any reference to credit counseling in your report. In fact if you are facing troubles managing your finances then you can try credit counseling. It does not go down as a negative in a credit report.

The perfect way to improve your credit score is of course the simplest of them all – pay your bills on time. Rid yourself of credit score myths and start your credit improvement stint as soon as possible.

At HOPE USA we help our clients everyday by educating them about their credit. If you would like to know more pleae call us at 704-503-3669. We are waiting on your call.