Category: Credit Rating

When you make the decision that you’re ready to buy a new home, you are going to need to take certain steps to make sure everything goes according to plan. One of the biggest mistakes many home buyers make is failing to prepare and plan for their purchase.

This is a significant purchase, probably the most significant purchase of your life, and it deserves the best forethought and planning you can put into it.

The first thing you’ll want to do is make sure your financial situation is ready for the move. You need to make sure that you are in a strong financial position to get your mortgage.

The better the financial position you start from the better the terms of your mortgage will be, the more debt you will be able to pick up if need be, and the lower your interest rates and finance charges. There are a number of steps involved in getting to the point of signing your real estate forms for your home closing.

You’ll need to get copies of your credit reports. Get a copy from each of the credit reporting agencies, as some will have items listed that others do not. If there is anything negative on your report, try to have it removed. If it is a mistake, simply follow the procedure set by the reporting agency to dispute the item and have it removed.

If there is a blemish on your report that is accurate, you are going to have a little more work ahead of you. First, contact the lenders involved in the blemishes and see what you can work out with them.

Some lenders will be willing to make favorable corrections to your credit report in exchange for bringing your account current, or for paying it off if it is behind.

You may be able to secure a new bad credit loan from LocalCashHelp that will start establishing a good record for you. You can also use it to pay off a loan that has delinquent notices and turn it into a good record too.

If you do have to take new loans to clean up some of your credit issues, you’ll need to wait a few months before applying for your new mortgage. You’ll need to make sure the records are cleaned up, and let the activity of new loans age a little to avoid some of the natural caution bankers feel when they see recent activity on a credit report.

Your credit reports will each have a credit score which will be a number somewhere between 300 and 900. This proprietary number system assigns a value to your credit history that indicates a relative measure that indicates your general creditworthiness and risk.

Higher credit score numbers show that you are a better credit risk. The better a credit risk you are the higher the debt load you will be allowed to carry and the better interest rate you will be able to get. It will also even make simply getting the mortgage easier for you.…

Did you know that you could potentially be paying fifty percent more on your homeowner’s insurance than you should be? If you are a homeowner, you are familiar with insurance premiums and you probably shop around, checking the rates of other insurance companies at least once a year or at every renewal. If you don’t, you might very well be spending hundreds of extra dollars a year on your annual homeowner’s insurance.

Homeowners Insurance is very important to your livelihood. Being educated about your homeowner’s insurance is even more important. Many Americans are unfamiliar with their individual policies, the terms, the premium, and what is actually covered. If you currently have a mortgage on your home, you will be required by your lender to carry homeowner’s coverage in order to protect the interest of your lender, as well as your own livelihood. Protection for your personal contents, the structure of the home, and personal liability coverage is usually included in your homeowner’s insurance packages.

What you may not know is that the premiums you are paying on your homeowner’s insurance may be a lot higher than that of another company, simply because your company may use credit rating as a tool in determining a risk factor.

I currently work for an insurance company, however, I will not name names, but I will tell you that it is an A+ rated company that operates in many of the fifty states. Credit rate increases can drastically increase your homeowner’s insurance premiums.

Just recently the company that I work for initiated a program called “Risk Pricing Model”. Basically, this program uses the customer’s credit rating to determine a classification for rating. Credit is not the only tool used in determining the price, other factors are taken into consideration, but the effect that the credit has on the homeowner’s insurance far outweighs the other factors in my opinion.

In the past six months, several of our customers have actually switched insurance companies due to this new program. Customers who fall into a higher risk or lower credit score category have seen increases up to 50 percent in their homeowner’s insurance rates. This is an astounding increase!

A customer that was paying one thousand dollars a year, would now be paying fifteen hundred dollars a year. Keep in mind that none of the other factors have changed. The coverage is exactly the same and the deductible stays the same. Individuals who fall into a higher credit score, lower risk module see a decrease in their premium up to 20 percent. It seems that the people with better scores are in fact getting ripped off. Why give one person a huge penalty and then turn around and give the other person a small discount?

The Risk Pricing Model was developed by the insurance company that I work for to assess risk based on people who have low credit scores and the persistence that “this group” files more claims on their homeowner’s insurance.

I cannot say that I agree. In fact, I don’t agree, not at all. I understand that there are situations where people get divorced or lose their jobs and fall on difficult financial times. I don’t believe these people should be penalized in these situations. I believe that if you have a good payment history and a lack of claims, your rates should remain the same. According to insurance laws, you cannot “penalize” one customer, you have to spread the risk equally.

My best advice to you, as a homeowner is to check for prices with reputable companies and be sure to read through your homeowner’s declaration page at every renewal.

Many of the larger A+ rated companies have gone to credit rating as part of the rating factor on homeowners’ insurance. It is worthwhile to check around other companies and prices. Above all, be educated and be informed.

If you are unsure of how your current rates are determined, set an appointment with your insurance agent for a personal insurance review. Take the time to meet with your agent on one to make sure that your home is adequately covered and that you are getting all of the available discounts that you are entitled to.

We live in a world where every dollar counts. Our retirement depends on it, our children’s college funds, and our peace of mind. If anything, pick up the phone and call your local agent to discuss your rates and what programs your insurance company is using to determine your homeowner’s rates. You might just end up saving several hundred dollars a year in insurance premiums.…