Beware, your home ownership financial skills affect your credit score and your refinancing terms

To keep your credit score ” ‘ high as it gets” manage your household finances within the right margins. That means monitoring your daily living financial forecast. Here are six tips for better home finance management.

1.     To begin with, until you’ve reached the highest score, don’t even attempt to refinance.

Iron out whatever wrinkles in the finances road you’ve met, first, so they won’t affect your score. Even $100 charge offs can deflate it. Utility companies and cable providers, as well as any other creditor, may report you to the credit bureau for any unpaid outstanding fees if you move, close the account, or refute the charges.  Charles Dougherty, of Wisconsin, dismally watched how his mortgage increased by 10%. Over the lifespan of the loan that was $15,000 more.

Start with the end in mind, check your credit score first, and then clean out every blemish on it even if it means prolonging it. Saving money may well be worth waiting for the right time.

2.     Making on-time mortgage payments

Late mortgage payments are the number one cause of lower credit scores. Depending on how the “hidden fees” of your loans are applied to late payments and failures to pay occurrences, your credit score will be proportionately and adversely affected. As much as 35% is what you may expect to see your credit score deflate as a consequence of late payments. Late mortgage payments are treated more sternly by the credit bureaus than credit card and car loan payments.

On the other hand, what is good for the goose is not good for the gander, and your credit score will not improve by making early payments.  As a matter of fact, it will not make any difference in your rates when you apply for credit down the road.

3.     Avoid HELOCs

You may feel tempted to get a home equity line of credit, or “home equity line,” but the risks involved are pretty steep.  First off, HELOCs are first or second mortgages set up for a maximum draw rather than a fixed amount. You can make drawings on the amounts as you go, by way of special credit cards and other forms. HELOCs also have a specified drawing and repayment period which is usually from 5 to 10 years in range. If your drawings are higher than 30% this would negatively affect your credit score since HELOCs are considered the same as credit cards: if you max them out, your available credit margin lowers and so does your score, by 30%.

4.     Your insurance rate is determined by your mortgage finances

Those late and skipped payments on your mortgage will be reflected in your auto insurance rates, at a loss to you of up to thousands per year, depending on your situation.  Insurance companies may think you are short on cash and more likely to file a claim.

5.     Utility bills and property taxes affect your c-score

Once any of your utility bills have been assigned to a collection agency, you are in the bog walking on quicksand. Property taxes similarly affect you scores only when they are reported for nonpayment but not for late payments.

6.     If you are already refinancing, avoid taking out and HELOC too.
   

   Your overall debt will increase, and your scores will lower. Otherwise, refinancing won’t affect your score if you keep making payments on time.