Last week I worked with a young couple looking for their first home. They were just starting the preapproval/homebuying search, and a house that was exactly what they were looking for came on the market. So, we quickly pulled credit and, much to the surprise of one of the potential homebuyers, there were some late payments on a card that she rarely used that dropped her credit score into the low 600s. We were able to make the loan work by just using the income of the spouse, but it reminded me that I should remind you to continually check your credit.

Even if you are not going to buy a house or car anytime in the near future, credit scores are looked at for so many things beyond buying. For example, many employers are now checking credit before hiring, and if you ever want to switch your credit card to one with better benefits, you want to have a high credit score. Fortunately, it is easy to monitor your credit. Many credit cards now offer free credit monitoring. Also, you can get your credit once a year for free at www.annualcreditreport.com. Or you can ask for one score at a time so that you can monitor it three times a year for free on the same website.

There are no secrets on how to build or maintain strong credit. You need to use your cards each month (preferably at least two) and pay them off on time. If you can’t pay them off, having a lower balance on two cards is better than a higher balance on one card. For example, if I have one card with a $15,000 limit and a $15,000 balance, my credit score most likely will be worse than another person having three credit cards with a $15,000 limit and a $5000 balance on each. It seems a little silly because, in both cases, there is $15,000 of credit card debt. However, one factor that goes into determining your credit score is the proportion of the balance, so my proportion is 100%, while the other person’s is only 33%.

Questions? Please contact Margie.