Repair Credit Score

Archive for January, 2008

Question: Will canceling credit card with zero balance affect my Credit Score?

I recently found out I have a credit card from Chase for 4 years which I never used, and the balance is still $0. Would it affect my Credit Score if I cancel this card?

Thanks

Answer: Do not close that account! Because you already have 4, I'm assuming good-standing, years for that account, it would terribly shorten your credit history and eliminate the available credit, two major components of a Credit Score.

If it wasn't so old, I may have suggest for you to cancel it, but not now. Keep the account open for emergencies and for the history. You also need to train yourself to view the monthly statements to ensure it isn't used if you don't plan to use it yourself.

Check out the first part of the link below, describing 4 credit-scoring myths.

What Will Canceling Credit Cards Do To My Credit Score?

How to get your free credit history check (cont...)

(c) Copyright 2006 by Timothy Thriftwood 

Now that you know the difference between a free credit history check and a whole free Credit Report check, you're probably wondering where you can get a genuinely free version. 

First of all, watch out for all the websites claiming to give it away for free, they're always selling something, as most websites that offer valuable services would. So don't waste your time on one of those online companies that claims to give you your free Credit Report and then wants to charge you money for it... The government says that you are entitled to one check for free every year! So how exactly do you get your government-mandated free Credit Report? 

Many companies are really going to hate me for posting this here, but it is my pleasure to present the no-hassle, bona-fide, absolutely free credit history & report check. 

All three major credit bureaus accept requests for free Credit Report checks by both snail mail and telephone, which they can either mail back to you or in some cases fax to you. Here is the contact information you've been seeking: 

Experian

• 1-888-397-3742
• National Consumers Assistance Center
• P.O. Box 2104
• Allen, TX 75013-2104

Equifax

• 1-800-525-6285
• P.O. Box 740241
• Atlanta, GA 30374

TransUnion

• 1-800-916-8800
• Consumer Disclosure Center
• P.O. Box 2000
• Chester, PA 19022

Question: Why don't we qualify?

My husband and I are looking to buy a house. We took first time homebuyers classes, made out a budget for what we can afford, checked our credit scores, and paid down our only credit card by a couple thousand. We are both fresh out of college, so we have not started to pay our student loans, but we have figured into our budget what the payments will be. My husband got a really great job over six months ago, and that is the reason we are even looking. To get an idea of what our mortgage would be before we applied, we did a variety of mortgage calculators online and through the bank that we are applying through for our loan. We found out yesterday that we only qualify for $60,000, but all mortgage calculators and our budget tells us otherwise. We were thinking it would be closer to $80-$100,000. So what did we do wrong, and what do we do in the future. We have thought about asking my parents to cosign, but will that help that much,or do we need to pay our card off?(About $3000)

Answer: In the lending industry there are many different types of loan packages. The online calculators might be set for a particular type of loan. You say you found out yesterday that you qualified for 60K. Where did you find this out from? If you went to a bank you were probably held to higher qualification standards, since it can vary bank to bank. I recommend finding a Mortgage broker, preferably one that someone you know has used in the past. The benefit of the mortgage broker is they can shop your loan around and get you a better rate. This will increase your loan amount. Remember that there are a lot of people that have gotten into exotic loans and now are in trouble. It is best to stick with a fixed rate since we are at near historic lows, by locking it in now you will have the same rate for the length of the loan. A variable rate mortgage might go down a little short term but is likely to go up long term. Paying down the credit card will help your ratios, and also might help boost your score a little.
Getting family involved in your personal finances usually comes at a price. I have had business dealings with family before and it opens them up to opinions of your business dealings personal or otherwise. It sounds like you have worked hard and are doing the right things. You will feel better about yourself if you stand on your own. If your family wants to gift you some money for a down payment that might be fine but it is my suggestion to stay away from borrowing.
It also sounds like you are at a point that small changes in income could make big changes in your buying ability. I was in a similar situation at your age. I bought my first house for less than I could afford. Later I had a setback and it worked to my benefit having a lower mortgage payment. You might be able to get into something and live there for a while and then either move up or turn it into a rental (long term best bet).
I hope this helps good luck.

Credit Secrets Revealed by Vancouver Mortgage Broker. 3 Ways to Improve Any Credit Score