What Hurts Your Credit?

Buying a home is a big decision in most people's lives.  You need to have good credit to do so, especially in today's real estate market.  It's important to make sure your credit is in good standing before you even begin to look for a Ventura County home.  But, what exactly hurts your credit?

Late Payments - While 60 and 90 day delinquencies are bad, making payments 30 days late, especially if this is a regular behavior, can also lower your credit score and significantly impact your creditworthiness with a mortgage company.

Foreclosure/Short Sale - When your Ventura home is foreclosed upon, your credit score can drop anywhere from 100-200 points and stays on your record for 5-7 years.  A short sale, on the other hand, may drop your credit score 75-100 points but, you will be considered creditworthy enough to purchase a home within two years, providing you haven't had anymore issues with your credit within that time.

Bankruptcy/Tax Liens/Judgments - Any sort of public record filed against you negatively impacts your credit score.  A judgment, even if it is paid off, is a blight on your credit record for seven years.  A bankruptcy will last on your record for 10 years (even after 10 years, you may have to request that it be removed) and tax liens never go away.

Settling a Debt - While it is better than ignoring your debt completely, even settling a debt for less than is owed is bad for your credit.

Collections - When a creditor calls in a collection agency, the collection agency then reports your bad debt to the credit reporting bureaus.  Again, this will dog your credit for seven years.

Charge Offs - A charge off happens when a creditor has exhausted all avenues available to them to collect on a debt (including collection agencies) and writes the debt off.  This shows future creditors that you can't be trusted to pay off your debts and sticks around for seven years.

When you decide to purchase a Ventura County home, find out what your credit score is.  You are legally entitled to one free report from each of the credit reporting agencies (Equifax, TransUnion and Experian) per year.  Look for errors, contact the agency with the reporting error and get your credit in check.  The higher your credit score, the lower your interest rate which also means the lower your monthly mortgage payment.  Your dreams of Ventura home ownership are in your hands.  Please contact us today if you need help buying or selling a Ventura County home.