LIFE EVENTS WILL AFFECT YOUR CREDIT SCORE (Part 1 — Marriage)
The trick is to know what should be in place to maximize the best outcome for all involved.
Lets touch on Marriage first. In some cases it may be a good thing to co-mingle finances to strengthen the couple’s financial position; in other cases, not so much.
Most couples enter into marriage with a plan to buy a home and raise a family. With the new FICO System (since 2000), both parties will need to have established good credit to get the best rates available on a mortgage. The interest rate you qualify for will be based on the lower of the two party’s credit mid-scores. If Dave Ramsey has provided influence that having credit is not wise, you will need to be educated on the proper use of credit to obtain your goals. In order to get a mortgage today you will want to have a credit mid-score of at least 740, although top tier mortgage rates are 760 and up. And for reasons no one can explain, the scores published on a credit report from a mortgage lender is always lower than from any other source, including the bureaus.
If one of the party has no credit, because of a cash and carry policy, but with plenty of other assets, they need to establish a good credit score. To do this it is necessary to evaluate the kinds of credit that are on the credit profile. There needs to be a good mix of the types of credit (e.g., installment, revolving, auto loans, mortgages). What needs to be done is to add tradelines, use them, and make timely payments. If you can establish both a revolving and an installment program with one “Inquiry” it would be helpful; any more than three inquiries in the last two years will affect a credit score. Another way to bring up a credit score on a thin file is to become an Authorized User on the Spouse’s well established line of credit.
There are many other legal matters that Newly Weds should concern themselves with. Wills, Living Wills, Medical Directives to name a few; these are free with enrollment in Legal Shield. Click here then Personal Legal Plans for an informative video.
To better understand these credit matters, and many other things to consider, order your free annual credit reports via the toll-free FACT-ACT program at 1-877-FACT-ACT (322-8228). The reports will show up in your mailbox in about two weeks. Contact us to make an appointment to do a Profile Review. This review could save you thousands of dollars over a very short period of time. For a Mortgage / Credit Score Analysis Click Here