Good Credit Score in 2009

Sun, 07 Jun 2009 05:27:57 +0000

Since the recent events in the credit market, the definition of what a good credit score could be changing.

What has happened in the credit market and the old way your score was viewed.

The best account of this could be the new times writer, Edmund Andrews, who just released a book on the crisis, “Busted: Life Inside the Great Mortgage Meltdown”. He not only reported on the subject but was personally experiencing it. The synopsis of his story is the fact that he had a good credit score and earned a decent salary. But behind the scenes he had very large child support payments causing him to only live on a few thousand dollars a month.

When he applied for a mortgage, the broker at the time gave him a $500,000 approval. The monthly payment alone was close to what he was taking home each month after his child support payments. Why then did he get approved for a mortgage? First, the lender had less than reliable lending practices and second he had a good credit score. He further remarks when he went deeper in debt his credit score actually got better.

Now, this might not be the exact circumstance with each default, but has many of the common trends in default that we are seeing today. The fact someone who really couldn’t afford a loan got it. And this was based purely on the credit standing and they had a job.

How these defaults will cause a change to your Credit Score in 2009

First is the view of what is a good credit score in 2009 will change. Usually this level is somewhere above 700 plus and can range up to 750. This range might shift higher or might even be subdivided into smaller groupings of scores.

Also, a good credit score in 2009 will not be enough to get a mortgage. You will have to prove that you can really afford what you are buying not just represent it. Lenders will have stricter guidelines that they follow and a good credit score and a job won’t get you approved any more.

There also might be a look into the underlying reasoning and how to improve based on an examination of the crisis. These findings might lead to a change in the credit score formula or more specifically the FICO score calculation.

How to get a good Credit Score in 2009

The same rules apply as they do in the past on how to get a good credit score. Pay your bills on time, keep your debt to credit ratio low and the list goes on here is a list of different articles to read on tips to improve your credit score

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30 Day Late Payments

Sat, 06 Jun 2009 05:32:42 +0000

Consider a less severe form of delinquency 30 day late payments can have a varied effect on your credit score. Its effects are related to how often this happens. If you are person who frequently pays your accounts on time then one late payment can have a larger effect than a person who always pays late. Seems a bit counter intuitive but needs a explanation.

If you are person who pays your bill on time every month, you should have a better credit score than a person who makes frequent 30 day late payments. In turn, you are reward by the FICO score caluclation in the form of a higher credit score. Since you have a higher credit score with no late payments a single 30 day late payment raises a red flag. And the effect on your credit score will reflect this alert.

On the other side, the person with several 30 day late payments already has their score adjusted all their late payments. So another late payment is no surprise. This makes a 30 day late have less of an effect.

Overall you should never pay late. If you have many already in your account history you need to develop a plan to ensure it doesn’t happen again. If you already have a good credit score you need to protect it by never paying late.