HOUSTON -- March 26, 2004 -- Reducing debt and cleaning up your balance sheet are important steps toward financial health, but don''t go overboard. That could leave you with a low credit score, which could hurt you when you apply for a loan or mortgage in the future, according to Houston-based Money Management International (MMI), a credit and debt counseling nonprofit.
Other actions MMI warns against include:
• Closing old accounts. It might seem smart to end accounts you never use, but this can shorten your credit history, which lowers your credit score.
• Avoiding all debt. No credit history at all is nearly as harmful as a shabby one. When lenders have no way to judge how you''d handle a loan, they''re leery.
• Co-signing for a loan. You may want to help a friend or relative, but there''s no upside in this for your credit score. You assume all the risk for the primary borrower''s actions, with zero reward.
• Assuming there''s a grace period. Even a payment one day late is still late and can lower your score.
• Rate shopping. Too many loan inquiries also hurt a score.
Russ Ravary is a licensed real estate agent in the State of Michigan and a Realtor.
Photos, Comp and Listing Information Courtesy of Realcomp II Ltd, Properties shown have been listed and sold by various MLS member REALTOR® agents.
I do not guarantee or warrantee any of the above information. Please feel free to verify any of the facts. I recommend to always have a home inspection, always consult an attorney about contracts, Purchase agreements and any legal questions. Also consult a CPA or accountant about tax consequence regarding a Michigan home sale, or Michigan foreclosure.