Building and Nurturing Great Credit Scores

In today's economy it is clear that credit and credit scores are extremely important.  In many cases the right score could not only save consumers hundreds of thousands of dollars, if not millions, over the life of a mortgage. It could also dramatically change an individual or families quality of life.  The point I am trying to make, is a higher score could buy a consumer a larger mortgage. This could allow a family to live in a better area with a higher rated school district.  In reality this could provide a child with a better education with more options for future success.  There are so many ways in which a credit score can help or hinder consumers.  Unfortunately, many consumers do not realize the power of credit and scores until they are denied financing or told they will have to spend hundreds or thousands more on monthly mortgage payments.  At this point they are playing catch up and companies like ours are called to help address lower scores.  In the majority of these cases we are successful at increasing credit scores by hundreds of points or just getting consumers to the goal they have in mind. 

To be clear here is a view into how low scores can hurt and how high scores can help.

John and Susan are teachers about to get married.  They would like to buy a home in the suburbs of Long Island N.Y. and start a family as soon as possible.  John had some credit management problems. He had many late payments with accounts that he did not pay at all.  He is now in his late twenties and has not addressed these credit issues in a few years.  Susan has at least 6 creditors listed on her credit report. She has always been diligent about managing her credit and paying on time.  Susan has a 745 Fico score and John's score is in the high 500′s. Since they need both incomes to cover the cost of the mortgage, both of their credit scores are essential for mortgage approval.  Unfortunately John also had some student loans that were defaulted on. Therefore, he can't get approved for an FHA backed loan.  The government does not want to approve a loan they insure if the applicant has previously defaulted with them.  This puts the couple in a difficult situation. Since real estate has dropped dramatically, they now have the opportunity to afford a home in a better school district which will enable their children to have greater success in the future.  If they decide to wait until John's credit naturally gets better, it could be 5 years and prices on homes may be much higher. This is a very stressful way to begin a life together and start a family.  Susan is already disappointed and resentful that her plans must be set aside and the relationship is already on shaky ground.


Larry is a real estate broker and has just come across a property that is an incredible value. He had no intention of purchasing an investment property but he knows this deal is a once in a lifetime opportunity.  Larry has been a great credit manager and has a Fico score of 785. Although his income has lowered dramatically due to the economy Larry has worked hard to insure his credit is protected.  Larry qualifies for the best loan at a very low interest rate. He just managed to afford the property with his income and has been approved by the bank.  If Larry's score was below a 740 he would have been denied the funding needed.   The property is valued at $800,000 and Larry will be renting it out. He will earn $3000 a month in profit of rental income once the deal is done.  Larry's credit has afforded him a great value and extra income at a time where he needs it most.  If he had John's credit this would never have happened.


Maggie is in her third year of part time employment with an Information Technology Company in NYC. She has built up a consulting business on the side. Maggie graduated from college five years ago. She is a very talented and goal oriented young woman.  When she turned 18 her mother gave her an authorized user credit card on a very old Visa account that was managed well.  Once the Visa card appeared on her credit, three months later, Maggie opened up a card solely in her own name.  Within a year of using and managing the card Maggie began building more credit. To date Maggie has 5 credit cards, a car lease and a few student loans.  Maggie has a credit score of 763 which is excellent for a young woman in her twenties.  With her mother's eighteen year old credit card on her record, her score boosted an extra 50 points. This puts her in a great score category.  Recently, with enough income from her part time consulting business she decided to develop her own business on a full time basis.  She will need to sign a lease for office space, get approval for equipment leases, hire some employees, and will need a line of credit as well.  Since Maggie is in the beginning of a new business she will have to sign personally to get approval for all the financing products needed.  Fortunately, Maggie will have no problem getting these approvals with her current credit scores.  If Maggie had John's credit she would either have to wait 5- 7 years or take in a partner limiting her ability to have control of her business and future.

As you can see credit can do much more than just save interest in financing. Credit is an asset that all consumers must aggressively manage since it can significantly impact so many aspects of an individual's quality of life and the choices available to them.