Santa Clarita Mortgage Lender Fred Arnold of American Family Funding gives four tips to help maintain and improve credit score ratings.

On a recent episode of the “Financial Hour” radio show, Fred Arnold of American Family Funding explained four key points to keeping a good credit score. These key points include maintaining on-time payments, keeping a low percentage of credit utilization, avoiding certain types of credit and maintaining a long-term positive credit history.

One of the most important parts of maintaining a high credit score involves paying balances as they are due to avoid running late on payments.

Related: Santa Clarita Mortgage Lender Explains Advantages Of Buying Versus Renting

“Thirty day late is what they look at,” Arnold said. He further explained that, while being four or five days late usually doesn’t trigger a 30 day late notification on your credit report, “it’s not good because there’s a penalty and there’s a higher interest rate.”

Arnold said he’s seen debtors get stuck in what he calls a “rolling 30 day late,” where they believe they’re continually behind on their payments even though they’re paying off their debt on time every month.

“Let’s say you’re late 60 days,” Arnold said. “Right before the 60th day, you make a payment. Well, that payment goes to the payment you owed 45 days ago, so if you wait another 30 days, you’re going to have another 30 days late.”

The Santa Clarita mortgage lender explained that, to avoid this trap, it’s important to make sure late payments are paid off alongside the amount that would normally be due in a given month.

Even if a payment is for something that should be covered under insurance, like a medical expense, Arnold advised debtors pay the requested amount and then work with their insurance company to get a refund later, as the missed payment will remain on the debtor’s credit score regardless of whether the insurance company is technically responsible for payment.

Another important step to keeping a high credit score involves keeping a low percentage of credit utilization. Arnold gives a particularly easy to understand example to illustrate this point.

“Imagine a $10 thousand credit limit,” Arnold said. “So, you have one credit card, that’s all you have with a $10 thousand limit and you owe two grand. Only 20 percent of your credit card limit is being used. But what if you owed $8 thousand? Now 80 percent of that limit is being used, and that’s where you run into the problem, is when you get (to using) about 50% of (the available credit on) your card.”

Arnold recommended consumers be particularly careful with “no interest” financing from stores such as furniture and electronics shops. These businesses use finance companies to secure loans for their customers. The Santa Clarita mortgage lender explained that loans from these finance companies are more likely to negatively affect credit scores for a couple of reasons.

Firstly, they often have a very low limit with a very high utilization. Arnold explained that a client of his had recently purchased $4,800 of furniture with “no interest” financing through a reputable furniture business. The loan used by that business’ finance company had a $5,000 limit.

“So immediately he has a new debt, from a finance company which is not as good as from a credit union or a bank, that’s almost maxed out,” Arnold said. “So the computer looks at that and goes, oh boy, finance company, they’ll finance anybody, and almost maxed out.”

Arnold said that this tied into another important point for those looking to improve their credit history: avoiding less desirable lines of credit.

The Santa Clarita mortgage lender recommends consumers “try to stay away from finance companies or getting credit from department stores.” In particular, he noted that customers often sign up for deals on department store credit cards when they offer holiday specials.

“Let’s say it’s a promotion around the holidays. Ten percent off,” Arnold explained. “Even if you spend $1,000, you save $100.”

Arnold claimed that this amount of savings is not worth the inquiry on a person’s credit report.

“Every new inquiry causes your score to go down a little bit,” said Arnold. In order to avoid the negative effect inquiries pose to credit scores, the Santa Clarita mortgage lender recommended consumers “shop within the first two week period” of their billing cycle when shopping for cars, mortgages or other large expenses.

Lastly, Arnold recommended keeping a long credit history as a way to boost one’s credit score. In particular, he recommended those with new credit find a trusted loved one with a good credit history and ask if they can be added as a “full user” on one of their credit cards or other lines of credit.

“When my kids went away to college, I put them on my credit card that I’d had for 15 years, and all of a sudden they had credit going all the way back until they were 8 or 7,” Arnold explained. “So, it made it look like they’d had this card forever.”

For more information, Arnold and his team at American Family Funding can be reached via their website or by calling (661) 284-1150. The Santa Clarita mortgage lenders at American Family Funding are available to help clients find the right loan for their major purchases without needlessly damaging their credit score.

Arnold said that he, or anyone at American Family Funding, will be “happy to guide you, even if you’re just looking to buy a car. We don’t sell car loans, but we’ll tell you how to go.”

Ed. Note: This article is a KHTS Community Spotlight for American Family Funding.

American Family Funding a Division of American Pacific Mortgage Corporation NMLS #1850

David Cantrell NMLS #1427091 — Licensed by the Department of Business Oversight Under the California Residential Mortgage Lending Act.

About American Family Funding, Your Resource for Santa Clarita Mortgages

Santa Clarita mortgage lender American Family Funding can help you fulfill your dream of home ownership. A highly rated mortgage lender in Santa Clarita, American Family Funding maintains a focus on community involvement and a commitment to giving back whenever possible. A friendly Santa Clarita mortgages advisor will make the first-time homebuyer experience an easy and stress-free experience — even with bad credit or a low down payment. Unlike some mortgage companies in Santa Clarita or mortgage brokers in Santa Clarita, the home loan officers at American Family Funding also specialize in VA loans, reverse mortgages, refinancing and the STAR Loan Program. If you’re looking for the best mortgage lender in Santa Clarita or a “mortgage lender near me,” contact American Family Funding today. 

American Family Funding
28338 Constellation Road
Suite 900
Valencia, CA 91355

(661) 284-1150

info@affloans.com

American Family Funding – Valencia

https://www.youtube.com/watch?v=8WFQaPxjGN8

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