The three major factors that are evaluated when determining if and how much you qualify for the purchase of a home are your credit score, income and debt. Your credit is one of the most important factors for a lender to determine how stable you will be with paying your mortgage, and it is important that you understand how to deal with credit card agencies who report positive or negative information to the credit bureaus.
Payment punctuality counts for about 35% of your overall credit score. Generally credit card agencies report late payments after 30-60 days, although you may accrue late fees before anything is reported. Reporting may vary with each credit card agency and regulations do change, so it may be a good idea to be proactive and contact your creditor to verify this information. Of course, the best practice is to mail checks and submit online payments 2-3 days in advance so that they are processed by the due date. But when unfortunate circumstances arise and payments cannot be made on time, call your creditor, explain your situation, and ask what other arrangements can be made.
Keep in mind that if you are late consecutively (even if only by a day) credit card companies have the option to take other actions as well. Such actions which will reflect negatively on your credit report include the reduction of your credit limit. With the downturn of the economy credit card agencies are more likely to take such actions. Some agencies may consider lowering your credit limit even if you have been making timely payments. So be cautious. Scott Talbott, vice president with the Financial Services Roundtable, stated the companies he represents are “struggling in a tough economy and trying to provide credit for consumers. We’re in a recession, so the general risk of nonpayment has increased across the board, so credit card companies are adjusting to that risk by increasing interest rates or decreasing credit lines, even if the customer has a perfect history,” Talbott said. “A very small percentage may see an increase in their interest rate or a decrease in their line of credit.”
Even though creditors are required to report every month they may not be allowed to tell you exactly what day of the month they report. This can become an issue if you are trying to lower your credit score within a particular time frame. For example, let’s say that you paid off one of your credit cards, November 5th, to increase your credit score and you’re expecting a higher score by December 5th. If your credit agency reported to the bureaus on November 4th then the bureaus wouldn’t be aware of your payment for almost a full month. In this situation communicate your intentions to your credit card representative and they may be able to assist you.
Dealing with creditors can be daunting and frustrating at times, but communicating and asking questions about their policies and procedures can result in hassle free experiences.