Why Does Paying Off Debt Lower Your Credit Score? It’s counter-intuitive. You finally pay off your auto loan or close your credit card, then eagerly check your credit score to see how it’s risen...only to see that it’s actually fallen by as much as 10 to 20 points! The reason for the drop is that you’ve removed a credit line, so your overall credit management picture looks worse. Remember, a credit score measures your management of credit, not the absence of credit. Advice for Keeping a Higher Credit Score • If you have a credit card, don’t close the account. Pay it down completely, but leave it open. • If you have an auto loan, don’t rush to pay it off. Wait until after you get your home loan, then pay it off (if you still have the cash). • If you have an auto loan, but no credit cards, consider opening a credit card or two, charging one thing under 20% of your limit, then paying it off over one or two months. But also keep in mind the age of your credit cards may affect your credit, too.
Planning to Buy a Home in 2021?
In the current tight housing market and lending environment, you’ll want to get a jump on challenges...
Have you made any New Year’s resolutions about your lifestyle habits? The kind where you say, “I resolve to eat better / get quality sleep / etc.” I have. And I’ve noticed that almost all these resolutions come down to willpower. I don’t know about you, but I find it incredibly hard to simply will myself to change a habit, even when it’s a terrible habit. But I read something recently that gives me hope--and a methodology. Science tells us that we develop habits when we allow our environment to support our choices, repeatedly, until they become habitual. An obvious example is keeping junk food in the house, which supports poor eating. So to adopt a new habit, one thing I can do is hijack my environment. Figure out how to make it support the habit I do want. If I don’t want to eat junk food, how can I set up my environment to support healthy eating? If I want to save money, how can I set it up to support less spending and more saving? If I want to listen more to my spouse, how can I set it up to support quality communication? I’ve only just started this process, and I’m learning that there are limits on how far I’m willing to go to change my environment. Remove the TV from the house? Cut up the credit cards? It’s an interesting personal journey.
• If your credit is spotty, start improving it now. • If you were thinking of buying a car or other major purchase, wait If this idea appeals to you, then I wish you good luck in hijacking your until after you buy your home. environment for the habits you want in 2021. • If you don’t have all your financial documentation together, now’s Sell Your Home with a Pro! the time to gather everything. • Decide if you need to file your taxes before or after buying. Selling a home today is more complex than it used to be. There are a lot more • Meet with your Realtor early to get your plan ready. Call me for a regulations, and many more buyer expectations. Contact me for a confidential listing appointment to review the steps involved. consultation to get started.
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www.BREMove.com
January. 2021 • Issue No. 21
