‘Tis the season to spend, spend, spend give. I love this time of year and I admit that it can be hard for me to not splurge a bit. Overspending doesn’t have to be in the form of extra presents under the tree, it could be getting together with family and friends at a restaurant – or even cooking up something extra special at home. There are endless ways to spend your hard earned cash this time of year whether it’s your savings or using a credit card.
If you’re thinking about buying a home, refinancing or are in the mortgage process, it can be quite easy to forget about your credit or savings during the holidays.
Your credit can be easily impacted by ringing up your credit balances. Credit scoring modules favor having less than 30% of the total credit line in use. Your credit scores will be Scrouged if go over 50%, or even worse, go above your credit limit.
It’s also important to keep paying credit cards on time. Miss one payment and your bank or credit card company may decide to reduce your credit limit…which, as I just mentioned, will not only ding you for a late payment, you may also find your scores fall if the lower limit brings the amount you owe over 30 or 50% of your new credit limit. Even worse, other creditors may follow suit and lower their credit limits due to the late on the other account. Talk about a blue Christmas!
New credit (even if there are no payments due for a certain time period) will also negatively impact your credit scores. And…if you’re in the mortgage process, you may get the opportunity to write a “naughty or nice” letter to the underwriter addressing each inquiry on your credit report and whether you opened new credit. Credit scores are “reflective” however, it can take some time for scores to recover after too much indulging.
Home owners may have the option of refinancing to eliminate debts and improve their cash-flow depending on their credit scores and how much equity they have available.
Bottom line, it pays to “be good” and not over extend your finances during the holidays. If at all possible, avoid the financial holiday hang-over!
If I can help you with your mortgage needs for homes located anywhere in Washington state, please contact me!
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