“Every single thing about housing is flashing green,” stated James Dimon, chief executive of J.P. Morgan Chase, in an interview with CNBC last month. “Household formation is rising, inventory is falling, and affordability is near a record high.”  This should mean many potential homebuyers will be assessing their finances in 2013 to get ready to buy a home.   Checking your credit score is at the top of the list, and in turn credit myths and credit misconceptions are plentiful.

Things You Should Know Before You Repair Your Credit:

• Make Sure You Get Your “Real” Scores!

Most banks and lenders use scores calculated by FICO (also known as Fair Isaac) and derived from your reports with the major national credit bureaus Equifax, Experian, and TransUnion. Be careful, the credit scores sold at popular credit report monitoring websites are NOT the same scores that lenders use!

• The 5 Major Areas Considered in Your FICO Scores include:

1. PAYMENT HISTORY         Are your payments made on time?
2. CREDIT BALANCE             How much do you owe?
3. LENGTH OF HISTORY      How long have you had credit?
4. NEW CREDIT                       Have you recently added or applied for debt or opened new accounts?
5. TYPES OF CREDIT             Credit Cards, Unsecured Loans, Auto Loans, Mortgages

• Paying or Disputing Some Accounts Can Hurt Your Scores

Simply paying a collection off will have little to no effect on your credit scores. In some cases it can even cause the account to resurface and be re-reported, further damaging your scores! Credit scoring is a complex system where even the removal of negative information can negatively affect your scores.this is not an area where common sense applies. There is a very strategic way to approach your credit card debt, your collections, and especially your medical bills – do your homework before throwing money at the problem.   You might consider a 3^rd party or professional for some guidance.

• Don’t Close Your Accounts!

Closing down credit cards will not help your credit scores – not only will you reduce your total available credit, but also reduce your total length of history as years go by. Maintaining a stable, lengthy, and diverse credit history with at least one major credit card is incredibly important. In some cases, paying off an installment account like a car loan or student loan could actually hurt your credit scores. Don’t blindly pay off debt without knowing where you’ll get the biggest bang for your buck!

• Think twice before you co-sign for a loan.

If you open an account jointly or co-sign a loan, you will be held legally responsible for the account. Activity on the joint account is displayed on the credit reports of both account holders. If you co-sign for a friend’s auto loan and that person doesn’t make the payments, your credit profile will be hurt and vice versa. The only way to end the dual liability is to have one party refinance the loan, or persuade the creditor to formally take you off the account.

St. Louis MORTGAGE INTEREST RATES for December 26, 2012:

• Conventional 30-Year Fixed 3.500%/ 3.777% APR
• Conventional 15-Year Fixed 3.000%/ 3.097% APR
• Conventional 7/1 ARM 2.625%/ 3.332% APR
• FHA/VA 30 Year Fixed 3.25%/4.160% APR
• Jumbo 5/1 ARM 2.625%/ 2.426% APR
• Jumbo 15 yr Fixed 3.000%/ 3.094% APR
• Jumbo 30 yr Fixed 4.625%/ 4.719% APR

*The above mortgage rates are based upon an 80% LTV, o/o single family with FICO scores of 720.

Paramount Mortgage is a locally owned Mortgage Banker celebrating our 41^st year. Great rates and programs are secondary to what is most desired in a lender relationship: Integrity, Communication and Customer Satisfaction. Be to check out our website: www.paramountmortgage.com

For more information or if you have questions on mortgage rates you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.