Monday, December 7, 2009

street cred

"My money is funny. And my credit...won't get it." - Martin Lawrence on an episode of Martin

That sentiment can apply to a TON of people in this country.

The big C

Credit...good or bad

As someone who has spent the last 10yrs in the mortgage industry (7 as an underwriter), I'd like to think that I know a little about credit. I do. I look at it every day! I've seen some horrible credit reports. I've seen it all. Fortunately, I'm looking at great credit reports now because bad credit doesn't exist.

Or does it?

Of course it does.

So, what is credit? What is good credit? Great credit is when your credit score falls between 700 and 850. When I talk about credit, people always ask me..."Kyle, how does credit work and how do I get my scores up?" Credit scores are merely a statistical analysis of a person's credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information, typically sourced from credit bureaus. You get your scores up by making payments on time on the debts that you owe (house, car, credit card, student loans, etc).

We're in a recession. Unemployment is at an all time high. Foreclosures are weakening an already unstable housing market. People are having to make tough decisions. Do I pay this mortgage or do I eat? Do I pay this student loan bill or do I pay my rent? Do I pay this car note or should I resort to riding public transportation? Lending institutions have tightened credit guidelines. Years ago, almost anyone could get a house or a car no matter their credit. And that's partly why we are where we are. We're in a hole and we're not getting out anytime soon. I think, at some point in time, lending institutions have to get the credit flow going again. It has to be monitored and regulated, though. It wasn't before.

I've always said that I wish that every report that I read had come with an explanation. There's a story behind each situation. I think that 95% of people want to pay their debts. I know I do. I think there are some circumstances that sometimes prevent that from happening. If you go through a divorce, you're credit is prolly gonna take a hit. What if you have to take care of an ill family member? Somethings gotta give. More often than not, it's a bill or an expense. The only advice that I can give you is this...

* get your credit pulled as LITTLE as possible

* be smart with credit cards and your credit limits

* if you can't pay a debt on time, notify the lending institution. they may be able to offer some other solutions for you.



SincerelyGo said...

I love credit and finances...ahhh like a breath of fresh air! Hey what do you know about hard money loans..thats one thing I can't wrap my head around.



B said...

Thanks for this, Brother Kyle. I'm 24 and JUST now learning about credit. Why they don't teach this mess in school, I don't know.

wynsters the tigress said...

good advice kyle!

Super Dave Van Buren said...

good post.. more young people need to learn about credit and how it works. A couple mistakes in college will have you playing catch up for a long time.

MzInspiredMind81 said...

Great post! You hit the nail on the head w/ letting the lending institution know if you can't make your payment. We're(the country) is in such a financial bind right now, that a lot of lenders are willing to really work with folks.

The F$%K it List said...

This was a great post. In purchasing this new house I've learned a lot more about the credit issue.

Reina said...

Good post. Thanks for the advice. I really wished they taught credit classes in college. No one should graduate in debt absent student loans.

Trish said...

Good post Kyle.
They definitely need to be teaching this to all young ones, but Im convinced that they love ppl with bad credit and not paying their bills on time. Theyre making money off of the ppl just paying the minimum on their credit cards each month.
Question: If Im paying my bills on time each month. How quickly does my score rise? Each month? and how much does it rise?

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