St. Cloud residents who will be buying a home, refinancing their mortgage, or even just financing a car anytime soon, should think twice before making abrupt credit moves. Even some actions intended to reflect positively on their creditworthiness can backfire.

As everyone learns, your individual credit score determines not just whether financial institutions will grant your application for a home or auto loan—they also play a decisive role in the interest rate you will be quoted. Your score is calculated by using various historical data to determine the degree of risk the proposed loan would subject the lender to—an arithmetic calculation projecting the likelihood that repayment will proceed on schedule. As you can imagine, millions upon millions of recorded transactions tell the tale, giving the scoring companies plenty of data to make their projections pretty dependable.

St. Cloud consumers aren't privy to the formulas that are used, but can still observe some less-than-obvious actions to take (and not take) in order to maximize their credit scores and their power as credit customers. One of them is simply to act with caution.

Whenever you are seized with the urge to pare down your complicated financial life, go carefully. Especially when your billfold begins to bulge with plastic, or your mailbox and email box keep getting clogged up with too many credit card company statements, the rule is usually, do nothing.

There are three solid reasons why closing down little-used accounts can be counterproductive:

1.      You shorten the combined length of your 'open credit' record. The oldest accounts are the most valuable for demonstrating that you are a veteran credit user instead of a Johnny Come Lately.

2.      You bring down the total credit available to you. The higher that total, the more creditworthy you show yourself to be. Closing an account brings down the total.

3.      Likewise, the percentage that you owe of the credit available to you goes up when you close down an account—even though you haven't borrowed a penny more.

The ins and outs of adeptly navigating the credit system are the opposite of credit itself: it's like money in the bank! When you apply for a home loan, that becomes apparent—even when mortgage interest rates are as low as they are now. Feel free to call me for help and advice whenever St. Cloud real estate matters are in the offing!

Providing a superior level of informed, professional real estate services to buyers and sellers throughout Central Minnesota. We have agents specializing in residential, commercial, multifamily, new construction, existing, investment properties, foreclosures/REO, and short sales with offices located in:

Five Office Locations To Serve YOU!

Saint Cloud 320-259-4554
Princeton 320-983-3555
Maple Grove 763-565-2000
Hutchinson 320-455-9127
Litchfield 320-298-1140

Premier Real Estate specializes MANY areas around Central MN including Saint Cloud, Waite Park, Rice, Royalton, Sartell, Royalton, Little Falls, Cold Spring, Saint Joseph, Elk River, Monticello, Ramsey, Saint Michael, Andover, Ham Lake, Anoka, Champlin, Buffalo, Glencoe, Brownton, Silver Lake, Kandiyohi, Dassel, Minneapolis, Maple Grove, Saint Louis Park, Saint Paul, Robbinsdale, Crystal, New Hope, Brooklyn Center and more!