Who can you trust? Deb hears this question over and over again in her professional practice as an elder law attorney and a fee-only, holistic financial planner. Let Deb teach you how to protect yourself and your assets from those who might not have your best interests at heart. [Editor's note: Deb no longer contributes to Silver Planet, but we have made her archived blog entries available as a service to our readers.]
Last week, I described the three major components of your credit score. Two minor ones are left.
New credit and credit inquiries = 10%: Have you opened several new credit accounts in a short amount of time? Have you shopped at several car dealerships lately?
Too many new credit card accounts could signal financial distress or reckless behavior that could affect your bill-paying capacity. And auto dealerships are notorious for running credit checks on you, even if you’re not in serious negotiations for a car purchase.
Try to limit the number of credit inquiries by being mindful of the following: If you’re applying for a home mortgage, stay within a 30-day window. All mortgage company inquiries will then count as one inquiry instead of several. Similarly, if you’re shopping for an auto loan, an education loan, or a new credit card, do so within a 45-day window. And tell those car dealerships to refrain from running a credit check until serious negotiations begin!
Credit account types = 10%: Is your debt spread over different account types, such as a mortgage, an auto loan, and a few credit card accounts?
If you own a home, having no home mortgage or home equity line of credit but having eight credit card account balances will lower your score. (This is also foolish from an income tax planning perspective, since credit card interest cannot be deducted.)
Next week, I’ll share the biggest misconception about FICO scores.
By Deborah Hoskins, JD, CFP
The Wise and the Wary Blog