Compass Mortgage - Loan Consolidations for NH Homeowners

Tips When Consolidating Debt

Closing an old account can never help your credit score, and may hurt it.
Opening a new account by applying for new credit may hurt your score. But on the bright side, once the new account is opened, the damage is done and there is no reason to close the account.

Balance vs. available credit: Your credit score is partially a function of the difference between your available credit and what you owe. Try to keep your balance below 50% of the available credit.
Length of credit history: Your credit score tracks the length of your credit history. A longer credit history helps your credit score. Closing older accounts can make your credit history look shorter which can hurt your score.
Shopping for debt consolidation financing: Be careful - multiple credit inquiries can hurt your credit score unless they occur in a short period of time. Do your home work within a short period of time. The scoring models treat multiple inquiries within a 14-day period as just one inquiry. They ignore all inquires made within 30 days prior to the day the score was computed.
Credit counseling agencies (a/k/a "Consumer Credit Counseling"): Enrolling with a “Consumer Credit Counseling” service is not suppose to hurt your credit score but sometimes it does. this is because your current lenders may report you as late, because you’re not paying what you originally owed. Also, you credit counselor may not send in your payments on time which will hurt your credit (this stuff really happens).
Being enrolled in credit counseling can affect your ability to secure mortgage financing and the interest rate you pay. Some lenders find credit counseling disturbing and will treat its enrollees the same as if they had filed for a Chapter 13 bankruptcy. Chapter 13 requires a repayment plan and might be looked at more favorably than a Chapter 7 which erases your debts.

If you are planning the purchase of a home and will need financing, it’s probably smart to avoid credit counseling. If you are already in financial trouble, credit counseling might get you back on track – just don’t expect miracles.
Credit repair clinic: According to Experian, going to a credit repair clinic will not be of help to you. There is nothing a credit repair clinic can legally do for you – including removing inaccurate credit information – that you can't do for yourself for free, and their fees can be substantial, ranging from hundreds to thousands of dollars.
The Credit Repair Organization Act is a federal law that prohibits credit repair clinics from taking a consumer's money until they have fully completed the services they promised. It also requires such firms to provide consumers with a written contract stating all the services to be provided and the terms and conditions of payment. Consumers also have three days to withdraw from the contract.

Have a question about your credit and qualifying for a mortgage in New Hampshire? Call Charley Farley at (603) 471-9300 or e-mail charley.farley@weloannh.com.

Compass Mortgage Inc. - 172 Route 101 - Bedford, NH 03110-5416
Office Phone: (603) 471-9300 Fax: (603) 472-8811 Toll Free Phone: (877) 211-5300

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